While many people realize that there are downsides to bankruptcy, like having it on your record for many years or having a lower credit score, the reality is that there are many benefits as well. If you’ve found yourself in a difficult position and think that bankruptcy is the best option to move forward, then you will want to focus on these positive effects.
The positives of bankruptcy depend on the type you choose. For example, with Chapter 13 bankruptcy, one positive is that you can keep your assets so long as you stick to the repayment plan. Similarly, with Chapter 7, there are exemptions that help you keep many of your assets while dismissing other debts.
What are four positive effects of bankruptcy to focus on?
Beyond the basic functions of bankruptcy, there are a few excellent effects. These include:
- The automatic stay, which protects you against creditors who want to seek to collect a debt. This helps stop harassing phone calls and notices.
- Getting money back from creditors. In some cases, if you paid money to a creditor shortly before a bankruptcy, you’ll get some back because of the preference law.
- Stopping your vehicle from being repossessed. The automatic stay stops the repossession, and then, you can work to renegotiate or reconfirm that debt to keep your vehicle in some cases.
- Avoiding unaffordable payment plans. Whether you owe creditors or the Internal Revenue Service, going into bankruptcy will help you avoid repayments you can’t afford. Your attorney can help you negotiate a payment you can afford if a debt cannot be dismissed.
These are four common, but very positive, impacts that bankruptcy can have. The benefits you will see will vary based on the specifics of your case, though. For some people, eliminating debt collections is enough to move them to seek bankruptcy. For others, saving their homes or vehicles is the goal.
If you’re struggling with debt, remember that bankruptcy isn’t all bad. It’s not just wiping the slate clean and making you start over. It has benefits that may make your life better in the long term.