The Advantages of Filing for Bankruptcy

Filing for bankruptcy is never a preferred choice but the recent recession has forced many companies to downsize and increased the unemployment rate by almost 10 percent. Many people have no alternative left to pay off their debts and are now finding relief in filing for bankruptcy.

You should perform an exhaustive research of all other alternatives before turning to the bankruptcy court. Try request a loan from your friends or family; negotiate with your creditors, find other sources of income like working extra hours or taking up a new job or take assistance from a legal debt consolidation firm.

If all else fails, the last option you have is to file for bankruptcy. Below are some of the advantages of filing for bankruptcy.

Discharge of Debts

The discharge of debts is one of the key benefits offered to a debtor under the Bankruptcy Law. It liberates you from the responsibility of paying most debts. Some debts such as alimony and child support are not dischargeable in bankruptcy. But for most debtors, filing for bankruptcy is comparatively a quicker way to get rid of anxiety, hardship, constant creditor stress as well as marital stress that are caused due to debt overload.

Protection from Unsecured Creditors

Unsecured creditors are those who do not take any kind of collateral or lien when offering credit. If you are unable to pay back your creditor, they will try claiming your assets like your car or home as an exchange. Filing for bankruptcy will allow you to protect your assets from such creditors. You can even prevent your creditors’ attempts to cut down your Social Security payments to obtain their previous over dues.

Automatic Stay

The most essential feature of filing for bankruptcy is automatic stay. You will acquire this right as soon as you a petition. An automatic stay is a court order that stops creditors from trying to collect payments from you. It restricts creditors to take any step against the debtor. These steps may include garnishments, utility shutoffs, attachments, repossessions, evictions or foreclosures. The debtor can later prevent these attempts from the creditor completely. Those creditors who try to violate the court order risk money damages, contempt of court, as well as attorneys’ fees. The main purpose of this feature is to give the debtor a little time to sort out the mess.

Being the last option, filing for bankruptcy will protect you from your creditors and will give you some breathing space and until you are ready to take the next step.