Too many people are in debt. Many of them face insurmountable debt that can be crippling. When your finances are in such poor condition, you may wonder about your options for improving the situation. One of the best ways to stop your debt once and for all is bankruptcy.
Even though it should usually be seen as a last resort solution, sometimes filing for bankruptcy is necessary and beneficial. It may seem surprising, but you can take advantage of your financial situation and make things better when you go this route. There are 12 surprising benefits of filing for bankruptcy.
Stop Wage Garnishment
If your wages have been garnished to pay back debt to a creditor, you can get an automatic stay from the court when you file for bankruptcy. This puts a stop to creditors collecting debts. The automatic stay remains in place for the entire duration of your bankruptcy case, which means your creditors cannot collect any more money from your account.
Get Back Money From a Creditor
One of the lesser-known benefits of filing for bankruptcy involves recovering money from a creditor. If you have recently paid money to a creditor, either voluntarily or involuntarily, it can be paid back to you through something known as the preference law.
Change Payment Terms on a Car Loan
When you’re in debt, there’s a greater likelihood that you are paying more toward your vehicle than what it’s actually worth. Filing for Chapter 13 bankruptcy can help to reduce your debt through what is known as “cramdown.” This works by lowering the terms of your car loan and the total payment amount you’re required to pay until you own the vehicle.
Stop Car Repossession
When you get an automatic stay in your bankruptcy case, you can ensure that your car doesn’t get repossessed. If you were in danger of losing your vehicle due to being delinquent on payments toward it or because a creditor tried to seize it to satisfy debt, bankruptcy can put a stop to it. Although the creditor can get a lift on the stay, it takes a lot of work that makes them decide it’s not worth it.
Undo Judgment Liens on Your Home
Filing for Chapter 13 bankruptcy and getting an automatic stay can wipe out judgment liens on your home. In other words, your home is in the clear and you no longer have to worry about losing it due to your debt. With a judgment lien avoidance, you can permanently remove this worry.
Get Your Driver’s License Back
If your driver’s license was revoked because you were at fault for an accident and you didn’t pay the judgment, you can get it reinstated after filing for bankruptcy. This is a lesser-known benefit of filing.
Likewise, you can also reinstate your driver’s license if it was revoked for failing to pay traffic tickets. Filing for bankruptcy can ensure that you get your license reinstated.
Bypass Unaffordable Payment Plans
When you file for bankruptcy, you can benefit from being able to bypass having to pay the Internal Revenue Service or state amounts that are too high. For example, if you owe taxes and the IRS or state requires you to pay a certain amount but you can’t afford it, you can get out of paying such a high amount.
Prevent Debt Collections from Restarting
If you have debts that went into collection, you can benefit from filing for bankruptcy. While certain debts cannot be stopped, many can, which means that you can prevent the debt collections from restarting after you have filed. In other words, if you had a large amount of medical debt go to collections and then filed for bankruptcy, that same debt cannot go back into collection.
If you owe a very large amount of debt and can’t foresee being able to pay it back, bankruptcy may be your best bet. It’s absolutely essential to consult with an experienced bankruptcy attorney to discuss your options.