Bankruptcy can be a great solution for those who are drowning under ever-rising debts. Those who are unable to keep up with loan repayments and interest will suffer from the additional fees and implications that come with the terms dictated by creditors. While bankruptcy can be very beneficial in certain circumstances, it will not automatically fix all of your problems.
Before filing for bankruptcy, you should have a clear idea of the types of financial issues that bankruptcy can tackle and the issues that it cannot. The following is an overview of ways that bankruptcy can and cannot benefit your life.
It can help you clear existing debts
Filing for either Chapter 13 or Chapter 7 bankruptcy can help you pay off your existing debts. This will give you the possibility to move forward without the burden of debts.
It can pause foreclosure proceedings
If you are worried about losing your home due to missed mortgage payments, filing for bankruptcy could stop your creditor from continuing with foreclosure proceedings.
It cannot solve all cash flow issues
If your basic expenses such as food and shelter are more than your income, bankruptcy will not be able to solve your issues in the long term. If you are not able to change your cash flow circumstances, you will likely acquire more debt.
It cannot fix your bad spending habits
Your habits have a huge impact on your finances. You must change your spending habits and live within your means post-bankruptcy if you want to succeed.
Bankruptcy cannot solve all your financial issues, but it can set you on the right path. If you want to clear your debts, you should consider the different bankruptcy options available to you.