Last Updated on November 16, 2023 by Hina Rubab
A lot of those who file for bankruptcy know that this decision will have their debts discharged. But, being free of debt is just one impact of the filing. Before you do the filing, it is best to understand its full effect on your life.
A reliable Bankruptcy lawyer in Las Vegas can tell you what you can expect when you file and whether filing for bankruptcy is your best option. The following are some of the impacts of bankruptcy on your life:
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Get Your Debt Discharged
When you file for bankruptcy, you will no longer be responsible for your debt. A discharge takes place when a court issues a permanent order that keeps your creditors from collecting on your debts. Credit card debt is a kind of debt that bankruptcy can discharge.
In general, courts think that providers of credit cards can absorb a person’s debt and still stay on business. But, some debts you are still responsible for even if you file for bankruptcy include child support and spousal support payments as well as tax liabilities. But, filing for Chapter 13 bankruptcy can help restructure these debts, so you can easily pay them off.
Prevent Your Creditors from Harassing You
After you file for bankruptcy, an automatic stay takes into immediate effect. With the automatic stay, your creditors won’t be allowed to constantly call you to collect on your debt while the bankruptcy case is active. Also, your creditors can’t send collection notices to you in the mail.
Generally, an automatic stay takes effect until your case is finished; although it can be lifted in some instances. For instance, a divorce can impact the automatic stay in your bankruptcy case.
Cause Your Credit Score to Dive
A bankruptcy filing can hurt your credit score. Keep in mind that even after the discharge of your debt, it remains on your credit report. Because of this, you may find it difficult to apply for loans and new credit cards. But, even if this is discouraging, bankruptcy can still be the perfect answer. While it will negatively impact your credit rating, it can help you live a debt-free life again.
You should think about whether to let your score drop temporarily to rebuild it now or pay off your debts, so it can help rebuild your score. The latter may not be the right option for you given your financial situation. By filing for bankruptcy, you relieve yourself of the financial pressure you are currently facing and rebuild your credit rating over time.