It’s a horrible thing to be buried in debt. Emotionally, you may move between powerlessness, hopelessness, anger, resentment, panic and a host of other miserable states.
If you feel stuck in major debt because of a divorce, a job loss, a medical event, a business failure or another serious problem, you are not alone in the stressful misery. If your best efforts — a second job, selling possessions, credit card balance transfers, 401 (k) withdrawals, more debt, and the like — have been unsuccessful, you may be reading about Chapter 7 bankruptcy to see if it is a viable option for you and your family. If you qualify for and file Chapter 7, which is often referred to as liquidation, these are some of the good things that could happen to you.
1. Collectors will stop calling you
For many people who are struggling with debt, phone calls from aggressive, rude collection agents have become a daily burden. Once you file under Chapter 7, creditors can no longer contact you. They are literally forced (by a court) to stop calling you and your family members.
2. You’ll have more money for the important things
Once you do away with credit card debt, medical debt, loan debt and other unsecured financial burdens, you will have more a lot more money to pay for housing, food, transportation, utilities and other expenses. Mortgage, rent, groceries and other necessities are so much more important than payments to a credit card company or a hospital corporation. This is great news for all Chapter 7 filers.
3. You can rebuild your credit scores
Some people are reluctant to file for bankruptcy because they’re afraid of their credit being “destroyed,” even though their credit may already be in the toilet. Yes, a bankruptcy filing can stay on your credit report for years, but your credit scores will improve once you’re able to pay all your bills on time.
4. You can start saving money
During times of financial crisis, many people end up emptying their savings and retirement accounts and borrowing money from friends and family. Getting out of debt means you can start putting money away for emergencies, future needs and giving to worthy causes.
5. You can actually have more fun
Getting out of debt feels great, not just because you’re no longer worried about harassing phone calls and feeling guilty about payments you can’t make. It can also be gratifying to have extra money to do fun things again.
Every debt situation is different. Chapter 7 or 13 may or may not be the answer for you. Talking to an experienced professional can help a lot.