Going through bankruptcy isn’t an easy thing to endure. There’s a stigma surrounding bankruptcy, which will have you believe that you are incompetent, a bad person, or an outlaw. However, in the face of these dire times, one should have an optimistic look toward these changes. Filing for bankruptcy isn’t the end of the world. In fact, it can be the beginning of a better life with more stable finances and better financial security. Some people even regard bankruptcy as a saving grace, after they find out that it doesn’t mean losing everything they own. If you want to know in detail why filing for bankruptcy could be a good thing for you, here are 3 good reasons.
1. It Isn’t the End of Your Financial Future
Sure, filing for bankruptcy means that you will have to pay a higher credit rate for the span of the next 7-10 years. You will also have limited access to your credit. However, that doesn’t mean that your financial future will be forever doomed. Your credit score will eventually increase, and your future won’t be plagued by certain debts like medical bills, utility bills, credit card debt, civil judgments, business debts, and rent. You also won’t be expecting any collection calls hounding you to pay your debt. Dealing with these calls alone can put you under great pressure, but when you file for bankruptcy, you will be on an automatic stay, which means that you won’t have to answer collection calls anymore.
This also means that bankruptcy, despite its negative connotations, can bring you peace of mind in the future and help you recover and revive your finances to how they were before you fell down the debt rabbit hole. You also won’t have to worry about wage garnishments, utility shutoffs, or evictions, as filing for bankruptcy puts an end to all of this. Plus, this will give you more time to think of ways of living with your limited income without having to rely on your credit card.
2. You’ll Be Able to Improve Your Credit Score
As we’ve mentioned before, you can improve your credit score during these trying times. While this won’t happen instantly, it is still achievable. A lot of people who have filed for bankruptcy have managed to increase their credit score. This was evidenced by the data gathered from the Equifax credit bureau, which has indicated that the Equifax credit scores of those who have filed for bankruptcy have fallen significantly in the following 18 months. In Canada, personal bankruptcy and consumer proposal laws also dictate rehabilitating the person filing for bankruptcy. That’s why financial gurus at BankruptcyCanada.com say that you will have full control over your financial situation once you file. Your income, assets, obligations, and spendings are all going to determine how high your new credit score is. Bear in mind that your spouse’s credit score doesn’t have to be affected.
Filing for bankruptcy will not affect their credit score even if you have joint debts. In that case, they will be held liable for those joint debts and nothing more. The post-bankruptcy period is a good time to follow strategies that will help you rebuild your credit score, like using a secured credit card or diversifying with a Credit Builder Account.
3. Lenders Won’t Ignore You
According to bankruptcy laws, nothing can stop you from getting a loan after bankruptcy. After filing, you might have limited access to your credit, which mainly depends on your credit score. Unfortunately, filer’s credit scores are low after bankruptcy, which will make them opt for other alternatives.
Getting a loan right after filing might not sound like a good idea; however, it can be used to improve your credit score. What’s even better is that lenders won’t turn their backs on you. In fact, some offer credit-builder loans, which are designed specifically for people with poor credit. These loans deposit money to your savings account or your CD (Certificate of Deposit) account, then you make monthly payments until the loan is paid off. Once that happens, you will be able to access these funds. Be mindful that these types of loans can be very expensive due to high interest. This is why experts recommend that you start with small loans.
Bankruptcy isn’t as terrifying as it may seem like once you get the gist of how to manage your finances after filing the claim. For that reason, make sure that you debunk notions that claim that filers go to jail or that they might be sued by creditors. If possible, find a bankruptcy attorney who can guide you through this complicated process so you can make the most out of your bankruptcy filing.