Potential Financial Benefits of Filing Bankruptcy
Finally, another potential effect or result of filing for bankruptcy protection can be looked at from a purely numerical standpoint. If someone is seriously behind on bills, it’s generally because he or she lacks the funds to make the necessary payments. Therefore, barring an unforeseen change in financial circumstances, he or she will likely be unable to pay those debts off anytime in the near future.
However, whether someone proceeds through a Chapter 13 filing that includes a payment plan or a Chapter 7 filing that includes liquidation and one-time payments to creditors on the petition, it generally works out that the existing debts are wiped out once and for all without having to come up with all or even a large portion of the amounts owed. This will allow a debtor an opportunity to save more of the money he or she is able to generate and provide for better prospects for the future.