Bankruptcy is a word we all feel dreadful when hearing about. Besides declaring, it is already hard enough to go through a difficult financial situation like this. Pretty sure juggling your bills and keeping your finances afloat is already a nightmare, but still can’t get yourself out of the tangled credit bills, taxes and mortgages. However, almost all of the credit company or the credit industry wouldn’t want us to understand and be fully knowledgeable of Bankruptcy. So how does bankruptcy really help your financial status? Why do most people think that the “B” word is bad?
Misconceptions of Bankruptcy
Generally, filing a bankruptcy means that you will be at least free or reduced financial obligations so that no further legal action can be filed against your monetary status. This means that you will be given a fresh new start –a chance to take hold and manage your finances well.
Pros of Filing Bankruptcy
• Eliminates or reduce debt –Some people have been able to lessen or remove some bills through Chapter 7 or known as “liquidation bankruptcy” This will allow the trustees to sell any non-exempt asset if applicable, but almost all the assets are exempt, and therefore there is no assets or possession to clear up and sell, so there is no dividend to creditors.
• Stops Foreclosure – Filing Chapter 13 will halt foreclosure proceedings. This allows you to keep your possession –house, car or any asset while you are still dealing with your financial struggle. This will also help, especially if you have multiple credit cards, this allows a debtor to restructure debts and eliminate other bills and contain all into one simple, affordable monthly dues.
• Stops creditor annoyance – Who wouldn’t want to avoid a frequent and sometimes aggressive calls and collection that can most of the time gives heart attacks and high blood pressure? Declaring bankruptcy will stop the collection nuisance of harassing lenders and collectors. According to the federal Fair Debt Collection Practices Act, or FDCPA, debt collectors are not allowed to engage in obnoxious behavior such as but not limited to:
• Calls you repetitively, especially during unreasonable hours like before 8 in the morning or after 9 in the evening (according to the law the indicated time is unreasonable.)
• Placing a call to the debtor without noting themselves as “debt collectors” Especially if they try to call or visit you at work and your employer or the company you are currently working with forbids it.
• Using disrespectful and profane language or threat and/or violence.
• Falsely asserting that you owe more than the amount reflected or claiming that they are lawyers and threatens to seize your properties or avows to jail you for your debt.
• Send you that are similar to a legal document and add interest, fees, or charges without your knowledge.
• A breath of fresh air – It does not only help you with the interest rates that you are struggling with, it will also give you a room to breathe, gather and restructure your finances back to normal.
Therefore, filing for bankruptcy is not really a bad thing at all. We all know for sure that it will leave a mark on your credit report, however, with the favorable terms that bankruptcy offered, your credit score will soon recover. At this point in time, it is always better to weigh down the pros and cons before filing bankruptcy. On the other hand, if you are in a very tight financial situation, I do suggest going for it, not only that it lowers your monthly payments and assuage most of your other financial obligations; it can also protect you from repossession as well as help your finances back to its feet.