The decision to file for bankruptcy is often fraught with stress and anxiety. Consumers who choose to file for bankruptcy are usually overwhelmed with debt and see no other option but to file for either Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Many who choose to file for bankruptcy, however, forget the benefits of bankruptcy. Bankruptcy is an option for struggling Americans as a way to provide a financial fresh start. Individuals who file for bankruptcy have often tried without luck to pay their debts outright and the legal process of bankruptcy allows the individual to eliminate all or a portion of debt.

The process for filing bankruptcy involves the discharge or repayment of debt under the supervision of a judge. Relying on the advice of a bankruptcy lawyer often helps the process of bankruptcy move more smoothly, as the court will need to see significant documentation about the individual's assets, liabilities, debts, income and other financial information.

Pros of Filing for Bankruptcy

The biggest reason consumers turn to bankruptcy is because it enables the debt to be either removed or renegotiated. Both Chapter 7 and Chapter 13 bankruptcy allow a consumer to move on from the financial mistakes made in the past and start a new financial beginning without the burden of excessive debt. In many cases, consumers are also able to keep their home from foreclosure by filing for bankruptcy.

Another common benefit of filing for bankruptcy is that creditors are no longer able to contact an individual who is behind on payments. Individuals who are behind on debt frequently receive calls demanding the payment of debt. Those nuisance calls must cease upon the filing of bankruptcy because the law creates an automatic stay. Creditors who continue to call or harass for the collection of debt are in contempt of court.

Cons of Filing for Bankruptcy

Consumers considering bankruptcy often worry about the damage to their credit score and their ability to gain credit in the future. While this is a personal concern that should be discussed with a bankruptcy lawyer prior to filling, it is important to remember that the path to bankruptcy often does significant damage to one's credit report. In some cases, consumers who file for bankruptcy may see an improvement in their credit score because the large, unsecured debt may be discharged.

Also, consumers often wonder about their ability to gain credit again. Bankruptcy can remain on a credit report for up to ten years, but a study released by the Credit Research Center found that 33 percent of consumers who had recently filed for bankruptcy obtain credit within three years of filing. Another 50 percent are able to obtain a line of credit within five years.

Bankruptcy is available to allow consumers to move on from past mistakes. While there are some disadvantages in filing for bankruptcy, many consumers who choose to file for bankruptcy find that they are better off in the long run because they are able to find reprieve from the financial burden of debt.