A Chapter 7 or Chapter 13 bankruptcy filing allows consumers to start fresh with a better understanding of financial matters. Unfortunately, bankruptcy carries an undeserved stigma that deters some from considering it an acceptable debt relief option.
Try to look at bankruptcy for what it is: a valid legal tool that allows you to redesign your financial future and start over. Here are some additional lesser-known facts about bankruptcy in America.
Not a permanent roadblock
While bankruptcy does impact your credit score, it need not be a permanent setback. Some filers see a rise in credit scores in as little as 12 to 18 months after filing. Even if it takes longer in your case, you may feel you are in a better place financially.
Offers creditor harassment protections
Many people believe the bankruptcy automatic stay that immediately stops creditor harassment is just a bunch of empty words. Of course, creditors can ignore the automatic stay, but they will likely face severe consequences. For example, the court could order them to pay the debtor financial damages for violating the stay.
Does not indicate personal or professional failure
Financial hardship can strike anyone, regardless of their status or background. You may be surprised that many individuals have built incredible success and wealth after bankruptcy. Most people file only after unforeseen circumstances like job loss or a medical crisis.
Filing empowers you to address ineligible debts
Some debts, like child support and certain taxes, are not eligible for a bankruptcy discharge. However, addressing other debts through bankruptcy and practicing good financial habits may enable you to pay down your ineligible debt.
Experienced legal guidance can help you understand how it works and help the process go more smoothly.