Bankruptcy. The word alone triggers our financial “fight or flight” in seconds.
Many think about how to avoid such an outcome. Maybe if we switch up our game plan or re-evaluate where our expenses are going. We imagine what loans or credit we could apply to push us through for just a few more months.
While bankruptcy carries a certain stigma to its name, there are times when it becomes a necessary step.
In fact, there are several benefits of filing for bankruptcy that you might not expect.
While filing for bankruptcy can alleviate the pressures of debt and other financial obligations, the peace of mind you do receive comes with long-term implications, even if you are taking a necessary step in the short term.
Before you make the decision to file for bankruptcy, it is important to know that not all filings are the same.
The federal Bankruptcy Code is made up of several kinds of bankruptcies, all of which are paired with their defining chapter of the Code.
As an individual (or a company) you determine which chapter relates to your financial history, future prospects, and personal goals before filing.
That is where an experienced bankruptcy attorney comes in handy, but we will get to that later.
These varied chapters can represent an individual seeking relief from personal debts. These may include car or mortgage payments, credit card bills, or medical expenses. All these chapters tailor to the individual’s situation.
You may be able to liquidate non-exempt assets or potentially keep your assets if you follow a repayment plan. This is great at improving cash flow while the individual is restructuring or spreading out payments over time.
Corporations have similar options that help them reform cash flow by reorganizing their business’s operations as well as their obligations.
Bankruptcy can be an incredible boon in the short term for an individual or business, but it carries with it long-term effects on your credit, like remaining on your credit report for up to 10 years.
This affects your ability to open credit card accounts, find an approval for loans, higher interest rates, and more.
You may also lose possessions, and if anyone co-signed with you on property or other assets, they could also be held partially liable for some of the debt related to your filing.
That is why it is not only important to review your situation, but also to find a trusted bankruptcy attorney once you have made your decision.
Bankruptcy lawyers help you navigate the Bankruptcy Code so you can find the chapter that best measures your circumstances. Your lawyer will ensure that you are within filing guidelines and regulations, which can increase your chances of success and recovery in the aftermath.
Do not make the choice to file for bankruptcy lightly or impulsively.
Bankruptcy does not have to be such a bad word. If approached mindfully and patiently with the right guidance, it can serve as a welcomed relief at the end of a long road.
Bankruptcy can be the beginning of the end of mile-high debt, past due payments, and other financial obligations. With the right bankruptcy lawyer, there are ways to reduce the sting our long-term credit can take when we file.
Because bankruptcy is not a “get-out-of-debt free” card; when we file, we have to accept responsibility for our actions and take the right steps to fix them, so we never repeat them.
This is not a journey to take lightly, but it is also not one to take alone. If you or your business need to file for bankruptcy, reach out to us today to start your way down the road to tomorrow.
If you want to learn more about the options you have, call The Jax Law Center for a free consultation.
Parker and DuFresne