When Escondido residents get to the point with their finances that they think it may be necessary to file for bankruptcy, they probably want to make sure they are making a financially sound decision. In reality, there are many good reasons to consider filing for bankruptcy.
For starters, even though it is true that a person's credit score will take quite a hit from a Chapter 7 bankruptcy filing, the fact is that if the right steps are taken after the bankruptcy filing is complete that person's credit score may bounce back quicker than they think. Important steps, such as carefully monitoring expenses and incrementally rebuilding credit, can get that score back to "average" range sooner rather than later.
However, one of the most immediate reasons why people file for bankruptcy is to put an end to creditor harassment. When an individual or family begins to miss payments on debt obligations, it won't take long for the letters and phone calls to start coming one after the other. Filing for bankruptcy results in an automatic stay, which means that creditors are required to stop these collections practices.
Lastly, but perhaps most importantly, filing for Chapter 7 bankruptcy will result in a discharge of many different types of debt. Chief among these is credit card debt, but bankruptcy may also result in a discharge of debt from personal loans or medical bills. Even if a certain type of debt, such as a recent tax debt or student loan debt, is not discharged through Chapter 7 bankruptcy, the discharge of other types of debts may free up space in the debtor's finances to tackle these non-dischargeable debts.
Filing for bankruptcy is a big decision. However, for some individuals it makes financial sense. Learning more about your various debt relief options may help you decide whether bankruptcy is right for you.
Source: nerdwallet, "When Bankruptcy Is the Best Option," Liz Weston, May 23, 2016