The Silver Lining to Filing Bankruptcy

National Association of Consumer Bankruptcy Attorneys

The Silver Lining to Filing Bankruptcy

Brian V. Lee

September 25, 2017

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Bankruptcy solves all sorts of financial problems. But when you’re facing the choice of filing bankruptcy, it can be easy to see only the downsides. If you decide that bankruptcy is the best option for you, try to focus on the benefits instead. Most situations are not as bleak as they seem, and there is a silver lining to filing bankruptcy.

Bankruptcy has downsides

First the negatives. There are downsides to filing bankruptcy. A bankruptcy filing remains on your credit report for seven to ten years. Bankruptcy may also make it more difficult or more expensive to buy a home or car for a couple of years. Other types of credit, like credit cards or lines of credit, may be more limited for even longer.

Some people also feel embarrassment or shame and procrastinate filing bankruptcy, trying to delay the inevitable but in turn just making things even worse. In most cases, once you know what you have to do, you should file bankruptcy immediately.

Finally, bankruptcy isn’t for everyone and for every situation. There are certain circumstances under which you should not file for bankruptcy. Always discuss your options with a bankruptcy attorney before making any big decisions.

But there is a silver lining to filing bankruptcy, too

First of all, bankruptcy allows you to eliminate your debts. In most cases, you will also be able to keep all of your property. Once you are debt-free, how you choose to use your financial fresh start is up to you. Many people treat bankruptcy as a life lesson and become more responsible financially. Most people consider the biggest benefit to be the bankruptcy discharge.

The Automatic Stay is a bright silver lining to filing bankruptcy, too. The Automatic Stay is, in fact, automatic and goes into effect immediately when you file. The stay prevents creditors from contacting you. Bankruptcy provides breathing room, which is often all that you need to form a plan of action.

Bankruptcy has pros and cons, but in the end, bankruptcy could actually improve your credit score. The downsides of bankruptcy all happen when you file. But the positive effects to your credit all take place over time.

Yet in many ways, the greatest silver lining to filing bankruptcy is peace of mind. You are addressing issues instead of ignoring them. You are avoiding problems before they become unmanageable. And you are taking charge of your life instead of letting your creditors make the decisions.