Do you need a fresh start?
Are you tired of the phone calls? Worried about garnishment? Is your credit score falling? Are you laying awake at night?
Your fresh start in bankruptcy fixes all that–and more! The purpose of bankruptcy is to help you.
The legal shorthand for the goal of bankruptcy is a “fresh start.” That term comes from a famous bankruptcy case in 1934, Local Loan v. Hunt.
The purpose of bankruptcy is to help you.
Back in 1934, the Supreme Court said:
One of the primary purposes of the Bankruptcy Act is to relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh….
This purpose of the act has been again and again emphasized … as being of public, as well as private, interest, in that it gives to the honest but unfortunate debtor . . . . a new opportunity in life and a clear field for future effort…
I have thirty years experience as a bankruptcy lawyer. I amaze people every day when I tell them all the ways bankruptcy gives them a fresh start.
Here are five things your fresh start in bankruptcy will do for you…
1. The creditors can’t garnish you
When you file bankruptcy, your fresh start blocks any court process to collect from you. Creditors can’t sue you, can’t garnish you, can’t take you to court in any way. And they can’t continue court process either. So an on-going garnishment is stopped.
2. They can’t call you or bill you
You probably don’t remember the Bankruptcy Act of 1898. Under the Bankruptcy Act of 1898, your creditors couldn’t garnish you, but they could still pester you to pay. That changed in 1978.
After you file bankruptcy, you won’t be afraid to go to the mailbox.
Your fresh start means they can’t contact you in any way to ask you to pay.
And they can’t keep hitting your credit report.
And that means….
3. Your credit score will jump
People ask me every day how much bankruptcy will hurt their credit score. And if everything is current and your score is over 700, bankruptcy will hurt it.
But if your score is already falling–because you are slipping late or because your debts are so high–your fresh start will help your credit score!
I know you are not going to believe this–if it’s just me talking. So I need to direct you to two different studies done by branches of the Federal Reserve.
“The individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy.”
That’s from a February 2015 study sponsored by the Federal Reserve Bank of New York.
“Credit scores start to recover immediately after the bankruptcy filing.”
“The individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy.”
That’s according to an August 2014 study sponsored by the Federal Reserve Bank of Philadelphia.
Here’s what people like you have told me, in the last couple months.
Fred M filed bankruptcy with me in October 2014, because Bank of America sent him court papers on a $14,000 credit card. By September 2015, his credit score (from Credit Karma) was 707.
Maria G filed bankruptcy with me in April 2014. (She was being sued after foreclosure on a $50,000 second mortgage.) A year later her score was 640. She’s not improving as fast as Fred (her debts were a lot worse), but 640 above a third of the people in the country–and it’s, barely, good enough to get an FHA mortgage.
This week a got an email from Scott. I don’t know Scott–he’s a reader on my blog. He wanted to tell other people about his experience.
“ My FICO score was 450. I filed for Chapter 7. Five months after filing, and two months after discharge, my FICO is 642. In 5 months I went from 450 to 642.”
4. You’ll sleep better
My law firm used Survey Monkey to do a survey of people who filed bankruptcy with us in 2008 and 2009. An amazing 88% said they sleep better after filing bankruptcy.
Allana said:
“ I’m no longer stressed out all the time, I can sleep at night, and I’m just happier.”
Darren and Naemi:
“ We were very scared, but we decided to go forwards with our decision, and we are so glad that we did; now we can sleep well like normal people.”
5. You’ll be smarter
No, I’m not saying you’ll “learn from your mistakes.” I’m saying something scientific: A series of scientific observations, recorded in the book Scarcity, by Sendhil Mullainathan and Eldar Shafir.
Those two professors show that feeling pressed for money clogs your thinking. Debt pressure slows you down mentally as much as skipping an entire night’s sleep!
According to the authors, when people are pressed for money,“ we become less effective at the rest of life.” People “juggling rent, loans, late bills and counting the days till the next paycheck” are much more likely to make mistakes, forget things, mistreat their children and get into accidents.
Here’s good news: The mental damage caused by debt problems can be quickly repaired. When income covers the bills, “cognitive capacity” rises.
Maybe you’ll look back and say your learned something from how you got into financial trouble. Maybe you won’t; maybe it mostly wasn’t your fault.
Either way, you will be amazed at how much better you handle everything, when you have a fresh start.
© 2015 Robert Weed
” I love being a bankruptcy lawyer, because I can help almost everyone I see.”
If you want to make an appointment, use our Get Started Now email box. Or call 703-335-7793, our main switchboard. Contact us today and sleep better tonight.