Protecting Your Rights And Your Future

Understanding the potential benefits of personal bankruptcy

On Behalf of | Jul 14, 2020 | Personal Bankruptcy

Facing overwhelming debt can happen to anyone in Arkansas. People might feel obligated to make their payments and try as hard as they can to pay all that they owe to creditors. Still, it can frequently become an exercise comparable to running in place.

What are some of the advantages of bankruptcy?

For those who are reluctant to consider bankruptcy, it is important to understand its various benefits. Most people are aware that bankruptcy will put an end to constant calls, attempts to garnish wages and legal claims. It can also be useful to improve a person’s credit score over time. Naturally, bankruptcy will severely reduce a person’s credit score in the short term. However, the improved financial outlook and better spending habits in its aftermath can be preferable in the long run.

Researchers say that people who filed bankruptcy raised their credit scores substantially within six months of the debts being discharged. According to NerdWallet, researchers discovered that the average credit score for someone who filed Chapter 7 bankruptcy in 2010 was 538.2. By the time their case was discharged, which was typically within six months, the average score rose to 620.3.

Other advantages to consider

Credit scores are not the only potential benefit of filing bankruptcy. Other positives include the ability to clear credit card debt, medical expenses, loans, certain tax debts and more. In some situations, the filer can also keep their home, vehicle and other properties. This is more often the case for those filing Chapter 13 bankruptcy.

When debts have become so problematic that it is impossible to keep up, and every time the phone rings, there is fear that it is a creditor, personal bankruptcy may be a wise step. For information on how to proceed, contacting an experienced legal professional may help.