When you file for bankruptcy, there are short-term and long-term benefits to consider. While the most immediate focus is on finding a way to handle unmanageable debts, you can benefit in other ways. Here are some of the ways that filing for bankruptcy impacts your short and long-term situations for the better.
Stop Collections and Harassment Immediately
The most immediate impact of filing for bankruptcy is that all collection efforts stop. Creditors cannot call you or attempt to collect on debts once the bankruptcy process has begun with the courts. Instead, they have to file a claim with the court. You won’t have to deal with harassing phone calls from creditors looking for their money anymore.
More than that, this initial change in your circumstances is a sign that there is hope that you will get out of this situation. For many, having to file for bankruptcy is something that they would consider only as a last resort. However, getting help from a lawyer and the court can actually be a sign of hope rather than an admission of failure.
Debt-Free In Five Years
In the long term, you can be debt-free in five years. Chapter 13 bankruptcy involves creating a five-year debt repayment plan. At the end of the five years, the remaining debt that you have is discharged, as long as you have met the requirements of the bankruptcy filings. That means that, at the most, you have five years of paying back debt, and then you are free of it.
Financial Recovery Beyond Bankruptcy
Bankruptcy frees you up to build a stronger financial life over the long term. Being saddled with a mountain of debt that you may never be able to repay means that you can’t be a productive member of society. You’ll always struggle to make payments and get back on your feet, which can stop anyone from spending money in better ways, such as taking risks on a business or investing.
The whole idea of bankruptcy is that you can be free of debts that could last decades, if not the rest of your life. Bankruptcy shortens the time that you are stuck in debt considerably so that you can move on and make better financial decisions that benefit yourself, the community, and the economy.
Before You File, Discuss Filing for Bankruptcy With an Attorney
Bankruptcy is an effective way to restart your financial life if you get in too far over your head. However, it does have long-term implications that you need to be aware of before you start a bankruptcy case.
Discuss filing bankruptcy with a bankruptcy attorney to review your case and see how it can help or hurt you over the long term. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to discuss your case with a bankruptcy attorney.
