If you have thought about filing for bankruptcy, you are not alone. Many people throughout the U.S. take advantage of this legal process every year and use it to achieve a fresh financial start.
According to the U.S. Courts, 544,463 bankruptcy filings occurred in 2020 alone. Not only is bankruptcy a common process for many, but it also provides several key benefits.
Depending on your situation and the type of personal bankruptcy you file, you could eliminate your responsibility to pay back certain debts. Most of the time, dischargeable debts include medical bills, utility bills, credit card debt and personal loans.
A stay on creditors
After you officially file for bankruptcy, the court will issue an automatic stay against your creditors. This stay prevents your creditors from moving forward with any debt collection activities. Some of these actions include wage garnishments, contact from creditors, property repossessions and lawsuits on debts until you finish your bankruptcy case.
Recoverable credit score
Even though a bankruptcy filing will remain on your credit report for several years once the process concludes, you can almost immediately start rebuilding your credit. Staying on top of your bills and using a secured credit card can help you boost your credit score after bankruptcy.
Filing bankruptcy at the correct time is key to fully benefiting from this legal process. An attorney can help you know when to file and then provide guidance throughout the duration of the filing process, so you submit all paperwork properly to the correct place.