Advantages and bankruptcy. Most people wouldn’t put these two words together on their own. However, upon closer inspection, those struggling with debt will find bankruptcy offers a refuge from one of life’s most stressful situations. Here are 5 reasons you’ll be glad you considered filing for bankruptcy.
- Discharge of debt will set you free
The biggest advantage of bankruptcy is the opportunity to discharge the majority of your unsecured debt. The court will typically grant a discharge as soon as possible. Chapter 7 bankruptcies generally take about four months from the time the bankruptcy petition is filed, while a Chapter 13 bankruptcy discharge is issued after the debtor completes all payments under the plan. Just reading that last sentence probably results in a sigh of relief — there is a light at the end of the tunnel!
- Leave all the taxing stress behind
This second advantage of bankruptcy is directly related to the first. One of the most appealing parts of bankruptcy is knowing there are NO tax consequences related to the discharged debt. Compare that to other forms of debt forgiveness where the IRS might claim the amount of debt that was forgiven was income and attempt to tax you on that amount. The last thing you need is to move from one financial woe to another. Bankruptcy can offer you a clean break.
- Protection of your property
If, like most people, you are looking for ways to keep your home, filing for bankruptcy can be the answer you seek. Chapter 13 bankruptcy is meant to help protect your place of residence from being taken — even if you are behind on payments. If you keep your house after filing for chapter 7 bankruptcy, having your other debts discharged should make paying your mortgage much more feasible.
- Protection from creditors
One of the worst parts of having debt problems is the stress of dealing with the harassment of creditors. The nonstop calls, scare tactics and attempts to collect money. This is where automatic stay comes into play and it is an advantage all debtors can appreciate. According to United States bankruptcy law, a debtor who has declared bankruptcy is immediately granted automatic stay. This means that creditors must halt all attempts to collect debts. It really is a beautiful part of the bankruptcy system.
- Modification of secured claims
As anyone who is considering filing for bankruptcy knows – plans change. And thankfully, bankruptcy takes that into account. When life throws you a curveball like the loss of a job or a health issue, the bankruptcy system offers the advantage of being able to request adjustments to your secured claims.
A secured claim typically includes things like:
- Car loans
- Unpaid real estate taxes
- Other property liens
Secured claims are claims for debts that are secured by an interest in property. A secured creditor can take that property, the collateral, if you default on the debt. So, as you can see, having the ability to make changes can prove very important.
The result of these advantages
When these 5 advantages of bankruptcy join forces, you end up with one, HUGE advantage. The ability to get a fresh start. A second chance that is free of financial hardships and judgments. Bankruptcy is not a bad word and neither are the people who file for it.
As someone who has seen (and experienced) what bankruptcy can do for struggling individuals firsthand, I believe in the power of pushing the reset button. When you’re ready to discuss your options, McCune Legal will be here for you. Give us a call anytime!