First, your personal liability on your dischargeable debts will be discharged tax free. Meaning, when you do your taxes after bankruptcy you will not be dinged or penalized for filing bankruptcy on your debt. Generally, outside of bankruptcy, if you settle, consolidate, or charge off debt, the amounts of debt you get rid of can be treated as income on your taxes.
Second, you are protected from most collection efforts during a bankruptcy case. The bankruptcy automatic stay goes into effect the day your bankruptcy is filed. The automatic stay is the law in place that says your creditors cannot continue to collect from you. Creditors can get around the automatic stay by filing a Motion for Relief, which would lift the stay. To do this there is a motion and a hearing. Keep in mind, generally, bankruptcy cases can be used to stop foreclosure, repossessions, garnishments or bank levies.
Third, after discharge you are able to start rebuilding your credit again. As a reminder your bankruptcy case will stay on your credit reports for 10 years, but you are able to start rebuilding right after discharge.
Finally, bankruptcy will give you peace of mind. Most clients find relief from what a bankruptcy can do for them, as soon as the initial consultation, where an attorney will go through the bankruptcy options with you.
If you have other questions about bankruptcy advantages or disadvantages, visit www.lifebacklaw.com to speak with an attorney. You will be glad you did!