Pros and Cons of Filing Bankruptcy
With So Many Options. What Are the Pros and Cons?
When your debt is more than you can handle, consider the pros and cons of filing bankruptcy. Although there are other alternatives, bankruptcy is the most powerful option for serious debt problems. Like any solution to a serious problem there are pros and cons to filing bankruptcy you must consider. Since most people are misinformed, a visit to a certified specialist is your best bet to sort out the pros and cons of filing bankruptcy.
Advantages of Filing Bankruptcy
One advantage of filing bankruptcy is that you don’t pay back your debt, or at least you don’t repay most of it. Things you want to pay, and keep, are easier to pay and keep current once you wipe out all the other debts.
Most people do not give up their car or home, and chose to continue these debts, but unsecured debts like credit cards and medical bills are either not paid at all or they are only paid a few cents on the dollar.
Creditors no longer aggravate you for payments. Once you file bankruptcy, they have stop calling you. Neither can creditors sue you. Nor can they garnish your wages. This is due to the automatic stay, which occurs the instant you file bankruptcy.
After you file bankruptcy and discharge your debts, creditors have to report zero balances on your credit report. This instantly improves your debt to income ratio. It’s easier to get credit after bankruptcy than most people think.
I have developed a program that guides your credit recovery so that you can expect a 650 to 700 credit score within 12 months after your bankruptcy is discharged.
You won’t lose property in most bankruptcy cases. Exemption laws protect most everything we own. And so the common “mis-information” you find on the internet about Chapter 7 bankruptcy being a “liquidation bankruptcy” where “all of your non-exempt property is sold to pay your creditors” is simply untrue.
Disadvantages of Filing Bankruptcy
Filing bankruptcy will lower your credit score. This is unavoidable. Bankruptcy will remain on your credit report of 7 to 10 years. But your score need not be lowered for long. Many people find that they actually have higher scores within a relatively short time, by taking proper steps to rebuild credit.
You can recover your credit quickly and completely so that even if the bankruptcy is still on your credit report, it will not hurt you. The key is what you do after you file bankruptcy to raise your score.
You will lose your credit cards after you file bankruptcy. In most cases, when you file bankruptcy your credit cards will be closed. This does not happen in every single case, but you should expect it. You are not permitted to “pick and choose” which creditors you list when you file bankruptcy. You have to list them all.
Bankruptcy will not eliminate all of your debts. This depends, of course, on what debts you owe. Most people know that student loans, child support and most taxes are not discharged in bankruptcy. Although this is true, the elimination of all of the other debt you owe makes it possible to pay the debts not discharged in bankruptcy.
Loans may be harder to get. Bankruptcy can make it more difficult to borrow money, in other words, go back into debt. Difficulty in getting loans depends in large part on what you do AFTER you file bankruptcy. If you take the proper steps to recovery your credit, it’s possible to get a mortgage loan at a good rate in as little as 2 years.
Creditors are eager to loan money, at high rates, to people who just filed bankruptcy because they know that you can only file bankruptcy after waiting a certain number of years. Pros and cons here too. I can show you how to rapidly improve your credit score, and get low rates.
Bankruptcy can carry a stigma, or an emotional feeling of failure. While some feel that filing bankruptcy is a failure IF THEY DO IT, these same people DO NOT feel the same way about their family or friends when they have to file bankruptcy.
This is an odd kind of “double standard” we hold ourselves to. There is no good reason to feel like a failure if you really need to file bankruptcy.
If you’re considering the pros and cons of filing bankruptcy, you don’t need to try to figure it out on your own. Get help from a Board Certified Specialist and Certified Credit Counselor. The list of pros often outweighs the cons!
The “cons” make matters worse the longer you put it off. The attorneys at West Law Office show you ALL forms of debt relief, pros and cons of both bankruptcy and non-bankruptcy, so you will KNOW you have the right solution.
Share This Article
Our Legal Services
Bankruptcy Learning Center
Here are two helpful calculators for managing your debt repayments and Chapter 13 commitments.