When your debt level becomes unsustainable, you may wind up in a situation where you’re desperate just to make payments to avoid aggressive collection tactics such as lawsuits, repossession or foreclosure. People struggling to make ends meet while coping with high levels of debt can often engage in practices such as borrowing money, often while incurring penalties and fees, from their retirement account.

Cashing out equity from their home or taking cash advances on high-interest-rate credit cards are both examples of desperate financial maneuvers that can cause more long-term harm than benefit. Moving debt from one place to another won’t solve anyone’s financial problems.

For those struggling with unsustainable levels of debt, making one month’s payments won’t resolve the issue but merely delay its resolution. If you have to make choices about how to fund your monthly bill payments or choose which creditors to pay while leaving other accounts delinquent, Chapter 7 bankruptcy could be the best option for you.

Chapter 7 bankruptcy can help those at or below the state median income

Chapter 7 bankruptcy, also called liquidation bankruptcy, helps those with limited income and assets get back on their feet after debt overwhelms them. There are limits on the income an individual can have in Chapter 7 proceedings, as well as limits to the assets they can exempt from liquidation.

These limits exist to protect lenders and banks from unscrupulous individuals seeking frivolous discharges while making enough money to reasonably repay their debt. Provided that you can pass the means test and demonstrate that your adjusted income is at or below the state median, which is $48,212 for a single person in Missouri, Chapter 7 proceedings can help you get rid of your unsecured debt and rework your finances.

Not only can your bankruptcy potentially discharge your debt, but it will also offer immediate relief from aggressive collection tactics. Those who file for bankruptcy receive an automatic stay that will protect them from any ongoing or future collection activity until they receive a discharge or the courts dismiss their filing.

Bankruptcy doesn’t destroy your credit but instead gives you a chance to rebuild it

People often have a negative association with the word bankruptcy, viewing it as the end of their financial future. While it is true that bankruptcy affects your credit score and your creditworthiness, the long-term benefits far outweigh the short-term complications associated with bankruptcy proceedings.

Chapter 7 proceedings give you the opportunity to quickly and effectively reduce the amount of unsecured debt you carry. Debts such as credit cards and medical debts will receive a discharge if you qualify, meaning you no longer have an obligation to repay those debts. Instead of continuing to borrow money from one place to repay a different debt, you can get rid of all of those outstanding debts through a single bankruptcy filing.

Once you receive a discharge, you will have more options regarding how you use your disposable income each month. It will be easier to pay your car payments and your mortgage if you don’t have to worry about making the minimum payments on overextended credit cards or moving medical debt for tens of thousands of dollars.

The short-term negative consequences for your credit score will have less of an impact than your commitment to improving your financial circumstances. Provided you take intelligent steps to rebuild your credit and avoid overextending yourself again in the future, Chapter 7 bankruptcy could be the pathway to a fresh financial start.