Perhaps the most important upside to bankruptcy is its ability to eliminate some or all of your debt. When you file for bankruptcy you are released from your contractual obligations of repaying your unsecured debts.
Relief from Credit Provider demands
Once the Bankruptcy order is granted an appointed Trustee acts as a mediator between the client and Credit Provider, which can help provide reassurance for both. By providing Credit Providers with the granted Bankruptcy order the Credit Providers will stop contacting clients as they can no longer make demands for debt to be repaid as the debt has been legally written off.
Third Party Assistance
A Bankruptcy order hands responsibility for your financial affairs over to a licensed Bankruptcy Practitioner. This arrangement relieves indebted individuals of the need to fend off Credit Providers who in many cases might otherwise be relentlessly demanding payment of outstanding debts. All Credit Provider correspondence can be passed to the Trustee to correspond directly.
Improved Financial Prospect
For anyone facing serious debt problems, this process can provide the prospect of improving your financial position. If not for this process it would take many years to pay off all debt due to accumulating interest charges. This in turn can lead to an individual feeling not just relieved but also as if there is some light at the end of the tunnel. Within 24-36 months after the Bankruptcy order is granted a client can apply for credit rehabilitation which restores the credit score and credit worthiness.
Debt is Written Off
Once your Bankruptcy order is granted, the responsibility for paying your unsecured debt will be taken away from you. 75% will be written off and interest charges stop. The remaining 25% is managed by a Trustee and distributed to Credit Providers. Any Credit Provider that does not put in a claim is written off 100%. Credit Providers may no longer demand payment from you. They must accept the portion of the 25% allocated by the Trustee.