While bankruptcy is often seen as the end-game for someone financially, they are not always the cases in reality. Don’t get me wrong. It does not write off all your debt and present you a new lease of life. But it can help you in many ways. This could be the reason why many well know individuals and organizations use it as a strategy to keep themselves afloat while they get their finances in order.
Although it does not go in line with general perception to say that there are benefits which come with bankruptcy, it does in actuality provides you some relief. When talking about this the good of this, it is important not to give the wrong impression to youngsters who are unable to make their own judgment. But at the same time, it is also important not to confuse or mislead people into believing that there is only one way to look at it. Here are some of them.
A little space to relax
You could have spent months being hounded by creditors and collectors. Not only is it taking a toll on your mental and emotional well-being, your family could be suffering from the effects as well. You will find some closure in that you will no longer have to spend days and nights trying to talk your creditors into having some sympathy for you. They will now have to follow the rules of engagement and take a queue number as ordered by the court. You have played the bankruptcy card and what will happen next is much more predictable compared to the unknown.
Pay less than you owe for settlement
If you have to repay the full amount of the debts that you owe, bankruptcy will irrelevant in the modern world. You will therefore be looking at payments at a fraction of what you owe to creditors. This is if they are lucky enough to be at the front of the repayment queue. And there could be the unlucky few creditors who get net to nothing from you. You might find it hard to control yourself from laughing in their faces after how they have stalked you for a whole quarter. But please restrain yourself from doing that. It is a lack of respect to the system.
Even though your credit will suffer, you will be given a clean slate in time
Make no mistake about it, this major event will be recorded in your personal credit report. Even though it will probably never get erased, lenders are not suppose to let it affect their scoring systems after a certain period of time following your discharge. But also take note that even though it will not hurt your credit score in future after many years, lenders and banks can operate in their own discretion on how to analyse your credit facility applications.
Personal growth
Most people will not experience bankruptcy or never even come close to a situation where they have to consider it. But it could be a life-changing event that finally ignites you into taking responsibility in your own financial dealings. You will now see first-hand where mismanaging your money can lead you. And since you will have intimate knowledge of your mistakes, you will be able to learn about avoiding them and helping others understand them.
What you cannot expect
Even though bankruptcy is a form of protection, you should not view it like an angel sent from the heavens to save you. Don’t expect all your debts to be written off. You will have to pay with what you have left on your assets. Creditors can still come after you in future if you are not detailed enough in your filings. This is where your lawyer will play a crucial role for you. If you are a co-borrower for some form borrowings, creditors can still legitimately go after the co-borrower for what is owed as your bankruptcy only applies to you.