Little Known Advantages of Bankruptcy
A person declares bankruptcy in the case that they are unable to pay off their debts and desires to have a new beginning. Bankruptcy is a solution that you can use in court and in most cases; lasts for one year and then you are able to discharge it, which means that all of the restrictions that are imposed on you will be released. That being said, in some cases bankruptcy restrictions can last as long as fifteen years. It is not too far of a leap to understand why lenders may push for this process. However, it can be harder to fully understand why debtors opt for it. There are, nevertheless, many hidden benefits to declaring bankruptcy that can make the process worth your while. Here are some little-known benefits of declaring bankruptcy that can make the process beneficial to your financial situation.
No One Has to Know
Many people are frightened of bankruptcy because they are worried that their family and friends will find out and judge them. However, the bankruptcy process can be a very quiet one if you prefer. Your family, friends, and co-workers do not need to know that you declared. Although the stigma and public humiliation that comes with bankruptcy is something of the past, if you’d prefer no one to know your bankruptcy, then it is your right to keep that information private. The only instance that your bankruptcy filing would be revealed is in the situation that you are asked for a credit history report. This can occur if you are applying for a credit card or loan. Additionally, in some cases they may ask to check your credit when applying for a job.
Your Financial Woes Will Be Over and Done With Quickly
One of the reasons why many debtors are okay with going through bankruptcy is that the process is extremely quick. That does not mean that the declaration record does not last for quite some time, as it does. However, the typical time it takes between filing the papers and experiencing debt relief is no longer than six months. On the other hand, other debt relief programs can take as long as six years.
You Can Keep Your Assets
Although you may feel as though declaring bankruptcy seems punitive, the majority of states will let you keep the assets that they consider necessary to your well-being and your work. This means that if you structure your bankruptcy correctly, you can get significant exemptions from bankruptcy proceedings for some of your more valuable assets. This makes the process of filing for bankruptcy much less painful and more convenient for everyone involved. For example, if you need your car to get to work every day, then this can be exempted from your bankruptcy process.
Bankruptcy Will Stop Garnishments
Declaring bankruptcy does not just stop a foreclosure, but it can also halt a garnishment. The only kinds of wage garnishments that are unable to be stopped by bankruptcy are those for alimony payments, as well as child support. If the certain debt that caused a garnishment is discharged because of the bankruptcy, then the garnishment will not resume after your bankruptcy has been fully granted. However, keep in mind that if student loans caused your garnishment, then the garnishment will start again once the bankruptcy stay has been lifted.
Bankruptcy Will Have Little Impact If You Are Young
Even though bankruptcy does stay on your record for a very long time, such proceeding only becomes a major issue if you are middle-aged. This is because credit agencies generally specialize in giving out loans to those that have bad credit, which means that it won’t take very long for you to be able to get another loan or credit card in the case that you need it. However, keep in mind that obtaining a credit card or loan after you’ve declared bankruptcy will expose you to higher interest rates.