Over the years, you garner a significant amount of debts and due to factors such as unemployment and emergencies, you are not able to get a good handle on it and pay it off. Despite taking steps such as debt consolidation, financial counselling, and consumer proposals, you still cannot get a hold on your debts.
If this sounds familiar, it may be time to consider the option of filing for bankruptcy. Bankruptcy consists of signing over all of your assets to a trustee who can then put it towards eliminating all of your unsecured debt. While bankruptcy is considered an unfavourable, last-ditch option in addressing debt, below are 4 advantages in choosing this process and ways it can eventually benefit you financially.
1. Hold off creditors
Struggling with debt can be a stressful time. You try to juggle obligations such as rent or mortgage payments, utility bills, groceries, and other personal expenses. Factor in the payments you are required to make for loans, lines of credit, and credit cards and the inability to keep up can be extremely overwhelming.
Filing for bankruptcy means that an automatic stay is automatically triggered. This means that by law, creditors are prevented from taking legal action to collect debts owed to them and they are forbidden to contact you about anything you owe. This is preferential sometimes over pursuing a debt repayment plan. Creditors are obligated to follow the laws regarding bankruptcy whereas they can choose to opt out of a repayment agreement.
2. Improve your credit
When you file for bankruptcy, it is true that your credit score will take a significant hit and it will be difficult to get financing if needed. However, some people think that this will continue for the rest of your life and this is definitely a misconception.
A bankruptcy filing will stay on your record for anywhere between 7 to 10 years. However, there is no reason why you cannot start to rebuild your credit immediately after filing. That way you will be in a better financial position right after the bankruptcy is discharged. At the time of your filing, you will know exactly when it will be discharged which is helpful in planning appropriately so you can enjoy the benefits of good credit as soon as possible.
3. All debts will be addressed
As mentioned previously, debt repayment programs are often chosen by people in debt because of the stigma that surrounds filing for bankruptcy. However, there is no guarantee that this will address all of your outstanding debts because creditors can choose not to accept the proposals and they agreements cannot assist with secured loans such as mortgages and credit cards.
A major benefit of filing for bankruptcy is that it addresses all debts. While most people who agree to participate in debt repayment programs drop out before completion, the laws around bankruptcy hold those who file obligated so changing minds later on is not an option. Bankruptcy addressing all types of debts means even the ones outstanding on your vehicles and your home are looked after. Therefore, you will not have to worry about surrendering these assets.
4. A new start
Before filing for bankruptcy, you probably felt like you were drowning in debt with no way to save yourself. You probably also got used to skipping debt payments and living very close to the poverty line as you struggled to afford necessities.
Filing for bankruptcy can give you a new lease on life, allowing you to be able to afford the things you need while still working to repair your credit. Bankruptcy will mean no more harassing phone calls and penalties for late payments that can definitely cause anxiety. When choosing to file for bankruptcy, you are afforded the opportunity to look towards the future and a normal life.
