If you’re struggling with debt, you can file for bankruptcy in order to reorganize your finances and start over. While most people struggle with credit card debt, medical bills, or student loans, there are several ways to go bankrupt.
You can consider filing for bankruptcy if you have too much tax debt or are unable to pay off loans due to circumstances beyond your control. It’s not an easy decision and it comes with its own set of risks, but it can also be a way out that’s worth considering.
Here are some of the advantages of filing for bankruptcy.
Debtors can obtain a fresh financial start
Filing for bankruptcy wipes the slate clean, gives you a fresh start, and allows you to start afresh without having to worry about debt collectors calling or pursuing judgments against you. You can also start over with a new job, build a business, pay for education, and start saving for the future. A fresh financial start ensures that your credit will improve. While it’s difficult to recover from a poor credit rating, if you have filed for bankruptcy now and can start rebuilding your score, it will be easier in the long term than if you had gone without any warning at all.
Exempt you from old tax liabilities
If your tax debt is high enough, it could be worth filing for bankruptcy and paying everything that you owe. Since filing for bankruptcy wipes away all of your old debts, you will not be stuck with paying any old bills or taxes. Furthermore, there’s no legal requirement that you repay a bankruptcy trustee if your previous creditor forgives their debt in full and gives up the right to collect interest owed.
Will prevent your lenders from aggressive collection
While a bankruptcy filing does not prevent your creditors from seeking repayment of the debt, it prevents them from legally collecting the debt. If you have filed for bankruptcy in order to cover excessive debts, your lenders will be aware that you are doing so and may have to temporarily suspend collection activity.
Gives you time to sort out your finances
Filing for bankruptcy gives you time to sort out your finances without having to pay off old debts or take on additional debt. Once you have filed for bankruptcy, your creditors will not be able to contact you or pursue legal action against you.