Why Bankruptcy Can Be a Positive Thing

Most people in the country feel that filing for Bankruptcy is a bad thing, something that should only be used in a desperate situation or when there is no other choice. Bankruptcy gets a bad rep, but there are many different ways that it can be a positive thing.  Contacting bankruptcy lawyers in Memphis, TN, may end up being the most beneficial financial decision you and your family can make. 

Bankruptcy Can Help Your Credit

Many people think that when you file for bankruptcy your credit will be ruined, and you will never qualify for a home or car loan again. This simply is not true. Most individuals by the time they consider bankruptcy may have issues that are keeping them from a high credit score. Thousands of people are turned down from car and home loans each day after being told that they have a debt-to income ratio that disqualifies them from financing options. Filing for bankruptcy protection can help. At the end of the bankruptcy process (meaning the court approves your bankruptcy) most people are awarded a discharge of their debts from a judge. Discharging your debt through bankruptcy eliminates any personal obligation you would have on the debts that qualify for discharge. The types of debts that qualify include credit card debt, medical bills, title loans, personal loans, and old utility or cell phone bills. These are the types of bills that keep a credit score from being as high as it could be. Once these debts are eliminated, you will no longer be disqualified based on a poor debt to income ratio. Additionally, a credit score will typically start to improve within 3-6 months of filing for bankruptcy protection. 

Bankruptcy Can Save Your House

During these hard economic times, thousands of people each month face difficult financial situations. Home prices are much lower than they used to be, and the average monthly income for American families is much lower than it was 10 years ago. This makes it difficult for good people to stay current on monthly mortgage payments. If this has happened to you, you may feel like you have no choice but to walk away from your home. This does not have to be the case. Most people who file for bankruptcy protection while behind on a mortgage loan are able to protect this asset by proposing a repayment plan to a judge. If both the judge and your lender approve of the repayment plan, you are allowed to keep your house as long as you keep making the future payments that become due. This becomes much easier to do after you file for bankruptcy, because you do not have to make payments on medical bills, credit cards, and other every day debts--you can simply focus on saving your home. 

Bankruptcy Allows You to Pay Debts

Many people think filing bankruptcy means that you have to admit to your creditors that you can't afford to pay them back. This can bring feelings of guilt or unease about whether or not you should file bankruptcy. However, once you file bankruptcy, you are allowed to pay back a certain amount each month to your creditors. You can either do this voluntarily once you have gone through the process, or you can file for bankruptcy specifically intending to repay your debts. Many people choose to file and pay back a specific amount each month. If you choose this route, the government will appoint someone in your area to monitor your monthly payments and determine how to divide up these payments among your creditors. Contacting bankruptcy lawyers in Memphis, TN, can help you plan your bankruptcy. 

Source : articlesbase.com