We often hear the term bankruptcy and think the worst. Certainly, running up enough debt to file for bankruptcy is never a good thing. However, there are many benefits to declaring bankruptcy, and doing so may help you begin working to build up your credit and finances and be rid of unmanageable loans quickly.
First, filing for bankruptcy will eliminate the constant barrage of phone calls and letters from creditors. Filing will prompt an automatic stay on all of your debts, immediately preventing creditors from suing or taking action against you. They will also not be allowed to contact you about collecting. This will give you peace of mind while you work toward building up your finances again.
Most of your debts will be completely discharged. Some back taxes can also be eliminated; this is specifically true of income taxes. While some types of debt (such as student loans) will not be discharged, filing for bankruptcy will prevent collectors from contacting you. That, coupled with the alleviation of your other outstanding debt, will allow you to begin focusing on paying back those non-dischargeable debts that may have seemed daunting before.
Depending on your state, you may be able to keep some assets you already own, such as your house or car. This will make it much easier to begin building up credit and earning money than if you continue to work through heavy debt.
Though filing for bankruptcy will certainly hurt your credit, it may not damage it as much as continued missed payments and defaulting would. If your debt seems impossible to keep up with, the best option for your credit may be to file.
The choice to file for bankruptcy is never an easy one to make, but it may be the right one, depending on your situation. If you are in serious debt and considering bankruptcy, review all of your options in order to decide if bankruptcy is a beneficial choice for you.