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There is no reason to be scared of bankruptcy

To a lot of people, filing bankruptcy can seem like a frightening prospect. As with many unfamiliar things, the fear of bankruptcy usually stems from misconceptions about what bankruptcy really means and does.

In reality, bankruptcy can be a lifesaver for people who are struggling with overwhelming debt. Here are some of the many ways bankruptcy can help you.

Bankruptcy gives you a fresh start

Most debts, including medical debt and credit card debt, will be wiped out in a successful bankruptcy. With a clean slate, you can start over fresh and move forward on a strong financial footing.

Bankruptcy stops debt collectors

An "automatic stay" goes into effect as soon as a person files bankruptcy. The automatic stay stops creditors from contacting you or trying to collect on their debts. After moths -or even years - of phone calls and collection letters, most people find this to be a very welcome relief.

You can keep your belongings

Some people fear bankruptcy because they have heard that they will have to sell off their personal property to pay their creditors. While this is a possibility in Chapter 7, the exemptions are generous, and most people proceed through bankruptcy without losing any property.

It can help you qualify for a loan

It is true that filing bankruptcy does temporarily lower your credit score. However, in most cases, the unpaid debts would cause even greater damage if you did not address them in bankruptcy. Your credit score will recover in time, and if you practice good financial habits after the bankruptcy, you can qualify for more favorable terms on a car loan, mortgage or other line of credit.

You do not have to go it alone

Many people feel intimidated by the thought of filing bankruptcy, because they do not know how the process works, or what they should expect. But you will not go through bankruptcy alone. Your lawyer will guide you through every step of the process, so that you always know what to expect and what it is you need to do.

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