There is a lot of stigma surrounding bankruptcy that sometimes, even if it’s the only available option for someone, he or she would still have a hard time accepting it.
Bankruptcy does damage on someone’s credit and self-esteem, but for some people it is the only remaining card that they can play. If they don’t bite the bullet, their finances would hit rock bottom and everything would just fall apart.
If you come to think of it, there are positive effects of bankruptcy – you only need to focus on it. After all, it gives somebody a chance to reset his or her finances and do better when the time comes.
Stopping wage garnishment
Wage garnishment puts more weight on your shoulders because there’s no escape from the monthly payments. The court has ordered that your creditor will take a certain portion of your income until the full debt amount has been paid. If you are already having difficulty with your finances, then obviously, wage garnishment can make things even more difficult for you. On the other hand, if you file for Chapter 7 bankruptcy, it can permanently stop the wage garnishment.
Prevention of car repo
If you work far away from home, especially if you are no longer young, your car is your partner at work. Without it, your performance at work could be negatively affected, which could result in job loss. Filing for bankruptcy can prevent your car from getting repossessed.
Delaying foreclosure of your home
If you are on the verge of home foreclosure, filing for bankruptcy could help you stall the foreclosure process, allowing you more time to catch up on your mortgage payments. In some cases, if creditors find that your property isn’t worth that much and may only cost them to sell, they may just abandon it and allow you to keep it.
Automatic stay on collections
When filing for chapter 7 bankruptcy, the magic of automatic stay takes into effect. Automatic stay immediately stops most creditors from trying to collect your debt. During this period, they can’t take legal action such as garnishing your wages. They can’t go after your bank account, take your properties or cut off your utilities.
Bankruptcy can give you a fresh start on your financial life
Most of all, bankruptcy, despite its adverse negative impact on one’s credit, can undoubtedly give someone a chance to rebuild his or her financial life. When all of the available solutions are exhausted, when there is really no end in sight to paying your debts, or when it’s impossible for your income to cope with the growth of your debt, filing for bankruptcy may be the only logical way.
For some, it may be difficult to fathom how they wound up with such situation. It may leave them scared and depressed, but soon they will realize that bankruptcy does have a brighter side. Bankruptcy is not the end, it could even be the beginning of something better for some, as it teaches them a lot of lessons in handling their finances.