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Can We Take The “Ban” Out Of “Bankruptcy?”

Ask anyone about bankruptcy, and they’ll say “please, dear God, don’t do it!” These people may be dear friends, but they might not fully understand the ins-and-outs of bankruptcy.

We seem to have a ban on the process of filing for bankruptcy. It’s not an official one; more a societal pressure. The stigma around it is so harmful that entrepreneurs and regular Joes see it as the devil incarnate.

Sure, some cons need to be understood and addressed. It’s the same with everything, good or bad. But bankruptcy isn’t always terrible. In fact, here are four reasons it may be helpful.

Debt Relief

You’re in a spot of bother and need an exit strategy. Looking around, however, there isn’t one to hand. And it isn’t as if you can snap your fingers and earn more money. Cutting back only so goes so far, too.

Although not always appropriate, filing for chapter 7 can relieve some of the pressure by wiping away some unsecured debts. You can read at DoveBankruptcyLaw.com if you’re interested.

If you’re able to get some debts dissolved through the court process, it’ll be easier to get out of the red and into the black.

Stress Relief

Never underestimate the impact of stress on your life. Regarding finances, it often exacerbates the situation.

Nerdwallet.com references a Nosal study and the findings are clear. Once people are overdrawn by 120 days or more, financial issues get steadily worse. So, if you’re a person who likes to suffer in silence, you should settle in for the long haul.

In comparison, participants who applied for a stay were more likely to see the light. Cortisol can make people do crazy things, including suffocating under a mountain of debt.

Credit Building

Yes, one of the downsides is that your credit rating will take a hit. In fact, it’s worse than that; filing for bankruptcy is a black mark on your record. Still, you may have no other choice than to roll the dice and hope for the best.

If credit is on your mind, don’t worry about it too much. Okay, it’s going to drop but it will bounce back again. For one thing, clearing debt plays a part in the process. Plus, it’s easier to be punctual when there are fewer balances to pay off. Simplethriftyliving.com has a list of resources if you need inspiration.

Counseling

To apply for bankruptcy, you have to go to counseling to weigh up the options. At these meetings, professional, frugal specialists will analyze your finances.

Sometimes, they will come up with ideas that may save money without applying for a chapter 7 stay. And sometimes they’ll recommend that you proceed with filing the application for bankruptcy. These are unbiased experts who have no skin in the game. So pay attention to their recommendations.

Bankruptcy is a big step and shouldn’t be taken lightly. But it can be a lifeline if your finances get completely out of control. You can hold your head up high and file the papers if you need to!