Benefits of Filing Bankruptcy

by Douglas Jacobs, Esq.

April 11, 2011

Filing a bankruptcy shouldn’t be the dreaded remedy that many people think it is.  There are many benefits to filing; some obvious and some un-expected.

My top three obvious benefits:

1.    Your bills go away, or at least you get a handle on them through a Chapter 13 plan.  Bankruptcy simply eliminates (discharges) most, if not all, of your credit card debt, old medical bills and other unsecured debt.

2.    Creditors stop bothering you.  Even if you are going to pay part or all of a debt, no one can try to collect it or even talk to you about it once a bankruptcy is filed. Finally, you will get your telephone back!

3.    You get a fresh start: a new chance without overwhelming bills.  You’ll be able to pay the things that are important without robbing peter each month to pay paul.

My top three unintended benefits:

1.    You get your dignity back.  Too often being broke affects your entire outlook on life.  You walk around worrying about the mortgage or the car payment. That is pretty tough on your self-esteem and can get pretty depressing. Once you file bankruptcy, however, those feelings immediately stop.

2.    Your credit score will return.  The biggest effect on your credit score is late payments..  A bankruptcy won’t help your score immediately, but since the bills that weren’t getting paid will be gone, you can rebuild your credit much more quickly.

3.    Your life comes back.   Money problems are often damaging to your home life and relationships.  When you and your spouse do nothing but worry about where the rent is coming from, you can get easily irritated and start fighting.  No more worrying about money – no more bickering.

All in all, bankruptcy can be a refreshing change to a debt-laden life.  If you’re having trouble meeting your obligations, talk to a competent bankruptcy attorney in your area.  It might really help.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.

Last modified: January 30, 2012