If you are struggling because of financial debts and burdens, you may be wondering if filing for personal bankruptcy is a good idea. One of the major benefits of filing for bankruptcy is the chance to start your life on a clean slate, financially speaking. Most types of debts, especially unsecured ones, can be completely discharged when you file for bankruptcy. Although filing bankruptcy has a number of advantages, there are some consequences that you should note.
Filing for personal bankruptcy helps prevent creditor harassment. When you file for bankruptcy, the court immediately imposes an automatic stay on all debts. This forbids creditors and debt collection agencies from continuing all collection efforts, including utility turn-offs, evictions, foreclosures, etc.
This, in turn, gives debtors adequate time to review their financial situation and obtain a fresh start. Any creditor who continues debt collection activities after the imposition of an automatic stay will face serious consequences.
Benefits of Filing for Chapter 7 Bankruptcy in Minneapolis
This type of bankruptcy filing eliminates all unsecured debts (i.e., debts not secured by collateral). However, it does not free you from other debts, such as secured loans, some tax debts, and most student loans. Although it does not eliminate secured debts, it can reduce or discharge liens if they are greater than the value of the property.
Effect on Your Credit Score
You should note that filing for bankruptcy does have its downsides. One disadvantage is its negative effect on your credit score. A bankruptcy filing can stay on your credit report for up to 10 years. Nevertheless, a debtor can rebuild their credit and often times they are able to obtain new credit easier after a bankruptcy filing than before, since they now have little or no debt after the bankruptcy discharge.
Determining whether you should undertake a personal bankruptcy filing requires advice from an experienced bankruptcy attorney. Visit Hoverson Law Offices today for an initial consultation and to find out if filing for personal bankruptcy is the right thing for you.