• Banks and other lenders may not be able to collect property under Chapter 7.bank image by Pefkos from Fotolia.com
  
  As of 2010, the number of people who have filed for personal bankruptcy (also known as Chapter 7) has increased by about 500 percent since 1980, according to data from the American Bankruptcy Institute. Nearly 1.5 million people filed for personal bankruptcy in 2009 alone. Part of the reason for this is because filing for bankruptcy offers some huge advantages over holding onto debt, which have become more obvious over the past several decades due to economic shifts.
  
  

Automatic Stays

• An automatic stay is a temporary postponement of the collection of debts. According to the City Bar Justice Center, automatic stays prevent lenders from immediately seizing property like your home or car, and they stop service providers from immediately shutting off utilities. Automatic stays may not completely save your property or services, depending on the agreements you have with the lender or provider, but they at least give you a chance to catch your breath and figure out a budget plan that will make the foreclosure or cancellation proceedings go away. For some people, this can be the difference between having a roof over their head and being out on the street.
  
  

Credit

• People usually associate bankruptcy with a nasty impact on their credit, and according to Bankruptcy Alternatives Information, bankruptcy does leave a mark on your credit score that can make it harder to get credit and make purchases or rent in the future. However, the other side of the coin, according to the City Bar Justice Center, is that filing for Chapter 7 eliminates the unsecured debts you may have. With no debts to pay, you will have only the Chapter 7 filing on your credit report instead of hit after hit for not paying your bills on time. The chances are high that your credit probably already has taken a nosedive by the time you need to file for bankruptcy, so it's better to eliminate all the points that could drive it further into the ground and just start fresh.
  
  

Stress

• Trying to make and stick to a budget is hard enough without lenders calling you or knocking at your door to collect payments. Trying to accommodate these collectors and shuffle money around to make payments is very stressful, as is the feeling of guilt from having gotten into such a dire financial situation. When you file for bankruptcy, you'll still have some work to do, but you won't have the anxiety that comes with debt anymore and can have a more positive outlook once you set up a budget you know will work. You'll have more time to relax and enjoy life instead of spending all of your energy worrying about your finances.