How Bankruptcy Benefits You

The “old notions” of bankruptcy as bad no longer apply. The overwhelming majority of consumers agree that the benefits of bankruptcy far outweigh any negative consequences. This is especially true now that bankruptcy is more “mainstream” and commonplace. Getting a “clean slate” and a “fresh start” is a very powerful, life changing process. And, good credit can be recovered faster now than has ever been possible in the past.

Drowning in debt ruins your life, Excessive debt is proven to cause physical and mental health problems. Divorce and relationship failures are frequently rooted in financial problems. Most consumer debt problems can be can be easily solved through bankruptcy.

Most people don’t lose any property at all. Yet, the benefits of bankruptcy, available to almost all, are ignored too often. This due to ignorance and misunderstanding about the process, the effect on credit and choosing the wrong alternative to bankruptcy.

How bankruptcies work

There are two kinds of consumer bankruptcy, chapter 7 and 13. Nearly twice as many consumers file chapter 7 than chapter 13. You will read on the internet that chapter 7 is a “liquidation bankruptcy.” Although occasionally a trustee sells property to pay creditors, in practice this almost never happens. There are laws called exemptions which protect most all property we own.

In chapter 7, your wipe out your unsecured debt,credit cards and medical bills with no payment.  People generally keep, and pay for, their cars and house.

Chapter 13 is a payment plan.  However, in most of the chapter 13 cases i file, the unsecured creditors only get 1 cent on the dollar! Just about the same as a chapter 7. Just like in chapter 7, we keep, and pay for, our cars and house.

Sometimes people chose chapter because they are not eligible to file chapter 7.  This can be due to income or prior bankruptcy filings. In other cases people chose chapter 13 because they can actually pay less to keep their cars.  Some will also pay less for their home than they would have to pay in a chapter 7 bankruptcy.

Effect on your credit

It is an old, but persistent myth that bankruptcy destroys your credit for 10 years.  It is true that years ago it did take longer to rebuild credit after bankruptcy.  When I filed case in the 1980’s, I told my clients it would take 4 to 6 years to rebuild credit.  Now, it takes only about a year to recover good credit, if you follow the proper steps.

I provide a complete program to guide my clients in rebuilding credit for both chapter 7 and 13 cases. Normally it only takes about a year to get a FICO score of between 650 and 700 after bankruptcy with my program.

Alternatives to bankruptcy

Of course, there are other options. Debt management programs number in the hundreds on the internet. And they all proclaim to be better than bankruptcy.  Debt consolidation loans are another option. Credit counseling is yet another.  If you have serious debt problems, however, know that there is nothing more powerful than bankruptcy.

Bankruptcy can help you to quickly get your finances under control.  Bankruptcy protects you from creditors with the “automatic stay” that instantly, the minute you file your case, stops creditor actions. Because of this, lawsuits, garnishment, harassing calls and letters will stop. Non-bankruptcy options do not provide this protection.

In weighing the alternatives to bankruptcy, comparing them to the benefits of bankruptcy, most non-bankruptcy options have a number of shortcomings. Debt forgiven in a non-bankruptcy program ends up costing you at tax time.  As a result, have to pay taxes on debts forgiven unless you discharge the debt in bankruptcy.

Debt management plans often hurt your credit longer than a bankruptcy, especially if you follow the proper program to rebuild your credit after discharging debt in bankruptcy.

Other Benefits of Bankruptcy

There are many other benefits to bankruptcy. The emotional release and feeling of freedom from debt can be life-changing. I have numerous clients who tell me they feel like a new person. After filing, they really have their life back once the debt is gone.

Clients contemplating divorce suddenly have less to argue about, and rediscover their love for each other. These are not exaggerations. True stories.

When you’re considering the benefits of bankruptcy, you need to compare all options.  Richard West is trained, and certified and experienced in all debt relief options.  At a free consultation, you can compare all options and get the best solution for your unique circumstances.

To learn more about the benefits of bankruptcy call West Law Office for a free consultation.

We offer in-office, video and telephone appointments.

We can do your entire case online.

Call (937) 748-1749 (Dayton/Springboro) or (614) 852-4488 (Columbus).

Call today, you’ll sleep better tonight.