If you're deep and debt, as the year winds down and you head into the next, you may be looking for a smoother 2015, especially when it comes to finances. If you spent 2014 living paycheck to paycheck, are behind on your bills and are just plain struggling, bankruptcy may be a good solution for you. Today we'll take a look at seven ways filing bankruptcy can make 2015 a much better year for you when it comes to your finances and sense of well-being.
Bankruptcy can help you...
Rebuild your credit
If you've been late on your bills for a while and have had accounts closed or charged off, your credit score has likely taken a nosedive. Continuing on that path will see it drop lower and lower. Filing bankruptcy will initially lower your credit score, but will also discharge most of your unsecured debt including credit cards, medical bills, store charge cards and personal loans. With these gone, you can start to rebuild your credit and get your score up higher than it would have if you had carried on with late and unpaid bills.
Save money and build a nest egg
If you're living paycheck to paycheck because you're drowning in bills, it's likely very hard (if not impossible) to save money. Getting a financial fresh start can free up money so that you can better take care of your financial responsibilities and have a little extra so you can save. Starting to save for retirement can help you feel better about your future and building up an emergency fund to help when unexpected bills pop up can help you avoid financial disaster down the road.
Put an end to collections activity
Being hounded by debt collectors is never fun. They call you at work, at home, on your cell and send you threatening letters. Some debt collectors are very aggressive, curse at you and can even make illegal threats like saying you can be arrested if you don't pay up. Dealing with this can be very stressful and cause problems with your work and personal life. It can make it hard to have any quality of life. Filing bankruptcy puts an end to these activities immediately and, usually, for good.
Reduce stress on your family and/or improve your marriage
Money problems are a huge source of stress for your marriage and family. No matter how you try to hide it, your kids may hear you arguing over finances and can sense when there are tensions between you and your spouse. Studies show that roughly 65% of couples argue over money on a regular basis and the odds of your marriage ending in divorce over finances is approximately 45%. Getting your finances under control can improve your marriage and reduce conflict in your relationship which can, in turn, make life better on your kids.
Save your home or car
If you're behind on your mortgage or car payments and are being threatened with foreclosure or repossession, filing bankruptcy can help you keep your property in the short (or long) run depending on the type of bankruptcy you file. Either Chapter 7 or Chapter 13 bankruptcy will help stop a foreclosure or reposession temporarily. Chapter 13 will then allow you time to get caught up and a Chapter 7 may allow you time to negotiate a refinance. Either option offers you time to figure out the best course of action and to delay (or end) threats of having your property taken away.
Get a job
Many employers run credit checks as part of their pre-employment screening. If a potential employer sees a pile of outstanding and unpaid debts on your credit report, that may be a barrier to a job offer or can even cost you a job you already have, particularly if you have a security clearance. Bankruptcy shows that you're trying to get your finances in order and can help you get a job where leaving your credit score as-is can hurt your job prospects. It can also help you retain your security clearance. This can be a much faster route to employment than trying to dig out of a financial hole over time without a legal leg up.
Have peace of mind
Being behind on bills and in over your head financially can be very stressful. This can greatly lower your quality of life, mess up your relationships and, in general, leave you a wreck emotionally. Filing bankruptcy and getting a clear slate on back balances can greatly improve your emotional state, restore your peace of mind and get your personal relationships back in balance. With finances being the single biggest cause of stress in most people's lives, it's easy to see how getting a fresh start can make your life better.