- March 23, 2023
- Posted by: Gill Hadley
- Category: Uncategorized
If you’re struggling with debt, filing for bankruptcy may seem like a tempting option. However, before you consider this drastic step, it’s important to understand the financial benefits of clearing your debts before a bankruptcy order is granted. Home owners with sufficient equity will find it hard to obtain monies from conventional lenders. We at Faith Legal Services can potentially assist with accessing these monies from private lenders. The benefits of staving off bankruptcy when you are a property owner are substantial.
- Improved Credit Score
Bankruptcy stays on the insolvency register for 3 months after you have been discharged from bankruptcy, and will stay on your credit report for up to 6 years. Making it difficult to obtain credit in the future. Clearing your debts before bankruptcy, on the other hand, shows lenders that you are capable of responsibly managing your finances. This can lead to an improved credit score, making it easier for you to get approved for loans and credit cards with favourable terms in the future.
- Reduced Interest Rates
By clearing your debts before bankruptcy, you may be able to negotiate reduced interest rates with your creditors. This can significantly reduce the amount of money you’ll owe in the long run, making it easier to pay off your debts and avoid bankruptcy altogether.
- Avoiding Bankruptcy Fees
Filing for bankruptcy can be expensive, with filing fees alone £680 in England depending on the type of bankruptcy you file. In addition, you’ll likely have to pay legal fees, credit counselling fees, and other costs associated with the bankruptcy process. By clearing your debts before bankruptcy, you can avoid these fees altogether.
- Protecting Your Assets
When you file for bankruptcy, your assets are at risk of being seized to pay off your debts. By clearing your debts before bankruptcy, you can protect your assets from being seized by creditors. This includes your home, car, and other valuable possessions.
- Improved Financial Health
Perhaps the most significant financial benefit of clearing your debts before bankruptcy is the long-term impact it can have on your financial health. By paying off your debts and avoiding bankruptcy, you’ll be able to build a solid financial foundation for the future. This can include setting up an emergency fund, saving for retirement, and investing in your future.
In conclusion, clearing your debts before bankruptcy can provide significant financial benefits and help you avoid the negative consequences of bankruptcy. If you’re struggling with debt, it’s important to seek professional advice and explore all of your options before making any major financial decisions.
