Debt is, in many ways, a necessary component of modern capitalism. Big purchases such as homes, vehicles or even businesses require substantial financial investment. If a person hasn’t had time to accrue liquid capital to invest in a venture or a purchase, securing financing is often the best option. Of course, people also use credit for the cost of daily life, not just for the biggest and most dramatic purchases of their lives.

It is often those smaller transactions that tend to accumulate over time, snowballing into an unmanageable degree of personal debt. If your household can no longer meet all of its financial obligations or if your creditors have begun to take more aggressive tactics to pursue payment, it may be time to reflect on whether filing personal bankruptcy could be the way to get your debt issue under control.

Unlike other solutions, bankruptcy gets rid of debt

You may have seen commercials on the television or heard radio advertisements talking about debt settlement programs or debt consolidation loans. In both of these situations, there are a number of negative consequences for the people who participate.

Debt settlement can have a negative impact on your credit score and may also result in a consolidation loan, as you will have to make a lump-sum payment for the settlement to apply in most cases. Consolidation loans simply move your debt from multiple smaller locations into one primary account. Not only will you still need to repay those debts, but you can find yourself incurring even more new debt when there’s an available balance to spend on your credit cards.

Bankruptcy stops collection efforts and releases you from repayment

When creditors become aggressive in their attempts to collect a debt, they can take actions that include repossessing property like a car, foreclosing on your home or filing a civil lawsuit in order to garnish part of your disposable income. When you file for bankruptcy, you receive an automatic stay that temporarily but immediately halts collection activity.

That way, you have time to make a little more sense of your circumstances and you can avoid the loss of major assets that you will probably need for your future stability, such as a vehicle and a home. As if the protection from aggressive collection efforts wasn’t good enough, bankruptcy also offers the discharge of your unsecured debts.

Unsecured debts include medical debt and credit card debt, which can often total tens of thousands of dollars or more. If the courts order a discharge at the end of the bankruptcy proceedings, you will have no legal obligation to repay that medical debt or those credit card balances. Bankruptcy offers a fresh financial start in a way that other debt relief systems do not.