Fighting Debt With Bankruptcy

Many people are struggling to make ends meet for their family, only to be further burdened by overwhelming debt obligations. Dealing with debt during a financial hardship can send even the most money savvy person down a slippery slope. Although there are several options for finding debt relief, only bankruptcy can offer some unique benefits for those looking for help.

A Timeout

When you file for bankruptcy protection a court issues an automatic stay order. This order is sent to all of your creditors notifying them of your filing and requesting a halt in all collection actions. What this means for you is that your creditors can not make collection attempts, repossess or liquidate your assets. The automatic stay order is only found in the bankruptcy process and gives you 100 percent protection against further garnished wages, the threat of foreclosure or repossession.

Further, the automatic stay order can become permanent for any debts that are discharged as a part of your case. This means that any debts that are eliminated in the bankruptcy process are not collectible in the future. Creditors will not be able to come after you for payment once the account has been considered resolved as part of your case. However, it is important to note that the non-collectible aspect of your debt applies only to you, or the filing party. If you were to file for bankruptcy on a jointly held debt apart from your spouse, it could have your non-filing spouse that is held liable for the debt. therefore, it is always wise to seek the counsel of an attorney to assist in your case.

A Clean Slate

Another perk of bankruptcy is that it can give you a fresh start by eliminating negative payment histories from your credit report. Unlike other forms of debt relief, bankruptcy does not leave behind the trial of delinquencies. While it is true that a bankruptcy will be reflected on your credit report, that notation does not damage your credit score. In fact, most people find an improved credit score after completing their bankruptcy case. With resolved debts and a fresh credit history in hand, repairing your credit is much easier after a bankruptcy than other methods of debt relief.

The fresh start offered also provides you with a chance to make positive changes in your financial habits. Securing new credit is important, but only after you have put smart money management strategies to work. The information provided in the debtor's education course of the credit counseling requirement can help put you on solid financial footing by helping you to develop and stick to a budget, start a better savings account and plan out your credit purchases.

Source by Lawrence D Pew

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