What are the advantages of bankruptcy?

Many perceive bankruptcy as a negative aspect. They think that bankruptcy gives embarrassment and brings down the status of an individual. But when you come right down to it, bankruptcy can really tarnish your reputation and dignity. Most especially that the modern-day society demand us to be the perfect catch. That we should fit in a certain mold, to live up to their standards and expects us to join the bandwagon no matter what it takes.

That is why most people in this day and age are now getting desperate just to stay away from that kind of situation as much as possible. That way, they will never need to actually go through that nightmare.

But when difficult financial times hit, many individuals and families these days find it difficult to stay afloat. When financial stresses lead to a decision between buying food and paying utilities versus making credit card payments, many opt to seek the protection offered by filing bankruptcy. For them, bankruptcy is a solution. It is their only remaining option so as to escape from the harsh ordeal.

Actually, there are a number of advantages that come with bankruptcy protection, regardless of whether a consumer files for Chapter 7, where debts are discharged without repayment, or Chapter 13, offering consumers the chance to repay certain debts in a more manageable fashion.

By far the leading advantage is that debtors may be able to obtain a fresh financial start. Consumers who are qualified for Chapter 7 may be forgiven and be discharged from most unsecured debts. A secured debt is one which the creditor is entitled to collect by seizing and selling certain assets of the debtor if payments are missed, such as a home mortgage or car loan. With those two major exceptions, most consumer debts are unsecured. You may be able to keep (that is, exempt) many of your assets, although state laws vary widely in defining which assets you may keep.

If truth be told, filing for bankruptcy will ultimately put off the demands of many creditors and it will also put an end to the irritating phone calls as well as to other improper behavior at the same time. As soon as your petition is filed, there is ruling called automatic stay, which prohibits most collection activity. If a creditor continues to try to collect the debt, the creditor may be cited for contempt of court or ordered to pay damages.

The stay applies even to the loan that you may have obtained to buy your car. If you continue to make payments, it is unlikely that your creditor will do anything. However, if you miss payments your creditor will probably formally request to have the stay lifted in order either to take back the car or to renegotiate the loan.

In spite of that, keep in mind that you cannot be fired from your job solely because you filed for bankruptcy. Ultimately, by understanding the advantages of bankruptcy you can understand if it is the right solution for you.