The Good Side Of Filing For Bankruptcy

Bankruptcy has always been linked with negative things

. After all, different media portals have always been downplaying this credit-busting option. But is bankruptcy really that bad?

In truth, when done for the right reasons, bankruptcy can actually be advantageous. It can work wonders in reliving anxiety of consumers over their financial problems. But how is this possible? And what benefits can consumers enjoy once they have filed for bankruptcy? Below we have provided the answers to these questions.

Benefits of Bankruptcy

Once your application for bankruptcy has been approved, you can immediately experience the following benefits:

1. Discharge most, if not all, of your debts. Bankruptcy can actually free you from all your exiting credit accounts. The reason for this is that bankruptcy terminates your obligation to payback whatever amount of money you owe your creditors. This means that once you have filed for bankruptcy you won't need to make payments for some of your secured credit accounts, personal loans and even your existing credit card debts. Still, you have to remember that bankruptcy does not terminate all you financial obligations. You are still liable to settle non-dischargeable credit. What does this mean? Some credit accounts and payments can survive even after bankruptcy proceedings. These often include alimony payments, family and child support, taxes, criminal fines, student loans and of course mortgages. So, you have to make sure that you pay down all of these accounts. This way, you can avoid facing legal charges from the federal or state government and from your creditors.

2. A complete halt to collection procedures. Most lenders are very eager to regain the money that they have offered for credit. However, as soon as you have filed for bankruptcy, your creditors must stop all collection activities at once. If your creditors continue to collect your debts, you can file formal complaints against them since this is one of your legal rights. Your lenders may be cited for contempt and even ordered to pay you damages.

3. Prevention from having your utilities cut off. Because of financial difficulties you may have skipped on some of your monthly bills and utilities payment. But your bankruptcy actually prevents the utilities provider from cutting off your basic services, even though you failed to keep up with your monthly payments. This is one of the special provisions of the bankruptcy law that protects the rights and privileges of credit consumers. In case the utilities company already cut off your services, it is mandated by law to restore your basic services as part of your declaration of bankruptcy.

4. Protection from fraudulent credit reports. Filing for bankruptcy also gives you the chance to scrutinize your bad credit report. You can request for the most recent copy of your credit report from the three major credit bureaus. As soon as your credit file arrives, see to it that you scrutinize all the entries listed on your it. After going through your report and finding inaccuracies or errors, your next step should be writing a dispute letter and sending it to the credit bureaus. This way they can investigate your records and verify your claim. Should they find your claim to be valid, they will eliminate the incorrect entries on your credit report and provide you a more accurate credit file.

Yes, despite its bad reputation, bankruptcy can provide amazing benefits. So never consider it a negative credit option. Instead, look at it as a good program that can help you eliminate your debts.

Copyright (c) 2010 Suzy Vanstrusen

by: Suzy Vanstrusen

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