5 Advantages to Filing for Bankruptcy

Declaring bankruptcy is a means and a right to get a fresh financial start. It allows individuals or businesses to resolve financial issues, rebuild credit, put a stop to aggressive debt collecting actions, and discharge certain kinds of debt that have become unmanageable. Here are 5 advantages to declaring bankruptcy.

  1. Address missed payments, defaults, repossessions, and lawsuits that are keeping your credit score down. While bankruptcy will also hurt your credit score, it is often an easier and quicker way to rebuild your credit score than to try and deal with each creditor individually over a number of years.
  2. Put a stop to creditors’ aggressive debt collecting practices like harassing phone calls, dunning letters, repossessions, and declined transactions. Even in the case of student loans, which are not dischargeable, at least you can prevent future aggressive collecting actions.
  3. You’re wiping the slate clean. The opportunity to get a fresh financial start should not be underestimated. While bankruptcy can have its own stresses, there is a great deal of peace of mind and relief to be gained from declaring bankruptcy. And keep in mind that you will probably end up keeping all of your personal possessions, either because of exemptions or lack of interest from creditors.
  4. While being in a disastrous financial situation often becomes all too public, bankruptcy is something you can keep fairly private. Friends, co-workers, and even your family do not have to know that you have filed for bankruptcy (unless you owe them money as well). The only time your bankruptcy will show up is on a credit history report, and as stated above, that can sometimes make a better statement to a lender than being stuck in a financial quagmire. And even if your employer was to find out, it is illegal under bankruptcy laws for an employer to discriminate based on bankruptcy.
  5. Debt discharge. This is an obvious one, but it’s huge. All of the (unsecured) debt that has been making your life miserable will disappear.


How Do You Rebuild Your Credit After Bankruptcy?

Your credit score is extremely important in many different ways. Everyone likes to have spending power, and you are definitely going to be limited if you have credit woes. The lack of financial freedom can be disheartening, but the damage can cut much deeper. Renting an apartment can be difficult if you have a very poor credit score, and you may even be precluded from consideration for certain jobs if your credit is not up to par.


It can seem like a bankruptcy filing is just going to make a bad situation worse if your credit is taking hit after hit, but this is not necessarily the case. While it is true that a Chapter 7 bankruptcy will remain on your credit report for 10 years, you can start to rebuild your credit right away if you are a homeowner. If you file for a Chapter 7 bankruptcy, and you have a mortgage on a home with limited equity, you can maintain ownership of the property (if you are up to date on the payments). The same thing is true for your car. If you continue to make these payments in a timely manner, your responsible behavior will have a positive impact on your credit going forward.


Many people are surprised to find out that they can in fact get credit cards with low limits after they file for bankruptcy. In addition to the low limits, there may also be rather high annual fees, and interest rates will be high. If credit card usage got you into trouble in the first place, you may be reluctant to try to obtain lines of credit after you have successfully filed for bankruptcy.


This makes sense on the one hand, but on the other hand, if you can get credit extended to you, and you act wisely, your score will improve over time. In addition to credit cards, if you don’t own a home, after a couple of years you may actually be able to qualify for a mortgage. A motor vehicle loan may also be available to you after bankruptcy, but you should be prepared to pay a high interest rate, and a significant down payment may be required.


Schedule a Free, No Obligation Case Evaluation


If you are in Portland, Salem, Eugene, Medford or any other city of significant size in Oregon, we have a bankruptcy law office near you. We offer free initial consultations, and you can set up an appointment right now if you call us toll-free at 1-800-682-9568.



Develop Good Habits to Prevent Unmanageable Debt

Advertising has always made an impact on consumers, but the influence has been taken to another level now that we all spend a lot of time on the Internet. Search engines inundate you with images of products that you have showed interest in through your browsing history, so you are constantly tempted. Plus, in many cases, when you do decide to make a purchase, you are offered a discount if you apply for a line of credit with the company. Before long, it can seem as though you can buy anything you want without reaching into your pockets to lay out any cold hard cash. Over time, this misguided perspective can lead to unmanageable debt.

Without question, the system is set up to invite people to spend beyond their means, but you don’t have to fall into the trap. If you develop good habits when you are a young adult, you can utilize credit wisely when it is prudent, and steer clear of behavior that can leads to unmanageable debt and a subsequent bankruptcy filing. To keep a finger on the pulse of your financial health, you should always be aware of your credit score. Many credit cards provide cardholders with free credit scores on a monthly basis, and there are also websites that you can visit to obtain your score, and some of them are free.

You get the score itself, but you also get an explanation of the factors that are influencing your credit score either positively or negatively. These would include the timeliness of your payments, the length of time that you have had credit, the percentage of your credit lines you have used, and the number of recent credit inquiries. If you keep these core factors in mind when you are making financial decisions that involve the utilization of credit, you will develop the right habits. Of course, the ebb and flow of your credit score will inform you with regard to the impact of your recent credit usage, so you can adjustment your behavior when necessary. Some people will set credit score goals, and this can definitely help to keep you on track.

Without question, good habits can allow you to steer clear of monetary problems, but you do have recourse if you simply cannot pay all your debts for one reason or another. Bankruptcy will be the right choice for many, and our firm can help you understand your options so that you can make sound decisions that get you on a path that leads to financial wellness. We have offices in Eugene, Portland, and a number of other cities throughout the state of Oregon, and we also have locations in Washington. If you would like to schedule a free, no obligation case evaluation, give us a call right now at 1-800-682-9568.