What are the Advantages of Filing for Personal Bankruptcy?

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  • Written By: Autumn Rivers
  • Edited By: Andrew Jones
  • Last Modified Date: 10 February 2020
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While the idea of filing for personal bankruptcy is daunting for most people due to the negative impact on the credit score, it has its advantages. The most obvious one is that most late bills will be considered paid, allowing the credit score to begin recovering. Additionally, the debtor is not typically bombarded with calls from creditors once bankruptcy is filed. Of course, the feeling of relief is usually worth going through months of proceedings with a bankruptcy attorney, as being deep in debt often results in stress. While this option should be used only as a last resort, it does usually benefit debtors in the long run.

Depending on the type of bankruptcy filed, most debt will either be wiped out or paid down eventually, allowing the debtor's credit score to begin recovering. Most people are aware that filing for personal bankruptcy results in a negative impact to the credit score for several years, which may prevent them from purchasing a house or acquiring credit cards at a decent interest rate. What some people do not consider, though, is that constant late payments can reduce a credit score quickly. Thus, filing for personal bankruptcy is usually financially better than continually paying bills 30 days late. Additionally, once the proceedings begin and the score drops, it will slowly start improving as long as bills are paid on time thereafter.


Another benefit of filing for personal bankruptcy is that most creditors will stop attempting to collect their money. This is because bankruptcy proceedings usually result in an automatic stay, which is a request for creditors to put their collection attempts on hold while negotiations are being made. This not only means that most phone calls from creditors should stop soon after filing for personal bankruptcy, but also that items cannot be repossessed. This benefit may allow debtors to keep their car, home, and utilities while the bankruptcy details are worked out.

Most debtors appreciate the reduction in creditor phone calls, as well as the knowledge that they can keep their car and home during the bankruptcy process. This means that they can take a break from figuring out how to keep the utilities on, or avoid being evicted. Often, even a temporary reprieve from all of this worry is appreciated by the debtor, who is typically quite used to being stressed when it comes to finances. Thus, a reduction in stress is yet another advantage of filing for personal bankruptcy.



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