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When does filing for bankruptcy make sense?

On Behalf of | Jul 16, 2023 | Bankruptcy |

No one wants to be in a position where they need to file for bankruptcy. However, citizens of Connecticut should know that there are some benefits to it. The main goal is to get a chance to reorganize your finances and get back on your feet. As you do so, you can also enjoy a respite from collection calls and daily mounting debt.

When the collection calls get too intense

One of the most overlooked benefits of filing for bankruptcy is the respite that it can give you from collection calls. If you are seriously behind with accounts long overdue, the calls do tend to become more insistent. You have a higher chance of getting a court judgment filed against you. Meanwhile, your negative balance grows.

Filing for bankruptcy won’t wipe out all of your debts. However, it can give you the benefit of an automatic stay. The point of receiving such a stay is to erase your underlying debt. This includes lawsuits and, in some cases, even wage garnishment. The immediate result will be an end to the collection calls.

When you need to keep your home

The best way to preserve your home ownership may be to file for bankruptcy. For example, Chapter 13 is set up in such a way as to allow you to keep your home. Meanwhile, Chapter 7 allows you to discharge most of your other debts. This gives you the option to concentrate on making your mortgage payments.

When your debts are simply too much

You can’t use bankruptcy to wipe out debt related to child support or, in most cases, student loans. However, if your debts are related mostly to credit cards, utility bills or business debts, bankruptcy may be your best solution.

Bankruptcy is not a magic tool that allows you to rack up debt and then escape from it. However, if you have gotten too far behind on payments, it can give you valuable breathing space. It can also be a life experience that teaches you to handle your finances more responsibly.

photo of attorney R. Richard Croce