Friday, February 11, 2011

Advantages of Bankruptcy

If a person is having difficulty paying bills, they may want to look at the advantages of bankruptcy for credit card debt relief. Bankruptcy no longer bears the stigma it once had; millions of financially strapped persons have declared bankruptcy in recent years. An unstable economy, job losses, divorce and other factors have caused this situation to occur more often than ever today.

Everyone seems to understand that going bankrupt will affect your financial status for up to ten years. There are many advantages of bankruptcy that should be looked at before deciding to take this legal move. By the time someone is at the point of being totally unable to manage their debts, their credit history and scores are already ruined. Going bankrupt may actually start to improve that problem because it wipes clean all old debts. The debtor is given a fresh financial start and improvements to their credit history and scores can begin right away.

Other advantages can be emotional. Any harassment or legal actions against the debtor must halt. Creditors may no longer call or contact that debtor any more, nor can they call employers, friends or family under penalty of law. All collection efforts must stop or the creditor may be slapped with fines.
This is part of a fresh start, giving the debtor some peace of mind and relief from creditor calls. Creditors must then deal only with the debt relief company.

Old debts like credit card debt, civil judgments, and past-due accounts are discharged, although a court may decide that some material items should be returned to creditors. Garnishments of wages and liens may be avoided also, if the legal bankruptcy action is started promptly.

Some property may be allowed to be retained by the debtor; different federal and state laws apply and debtors should consult with their licensed attorney about exempted items. Under bankruptcy actions, the debtor may select certain debts to exclude. This means they still owe those creditors and this also gives the debtor a chance to continue to improve upon their credit history by making timely payments on any retained debts.

Declaring bankruptcy is costly, takes time, and may be distressing to the debtor. However, the advantages of bankruptcy far outweigh the distress and harassment from creditors that lands upon the debtor. Credit history and scores will slowly recover, and within a few months new offers of credit will be presented to the newly bankrupt person.

Sharon Peters is a writer for Franklin Debt Relief.
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