Are you thinking about going bankrupt, but aren’t quite sure that it’s the best course of action? If you’re like most people then you’re probably more confused than anything else – and who can blame you? Given all of the negative press surrounding the bankruptcy process, it’s no wonder that most debtors are scared away from the prospect of filing long before they’ve learned about the pros and cons of doing so. Fortunately, we have just the information you need if you find yourself on the fence about filing a bankruptcy claim.
Going Bankrupt Pros And Cons
The pros of filing bankruptcy seem pretty straightforward, don’t they? You have a shot at completely eliminating a majority of your debt over a relatively brief time period – about 6 months. To be certain, debt elimination is the number one “pro” of claiming bankruptcy. However, there are some others including the following –
• An end to harassing creditors – if you’re tired of your creditors hounding you day and night about your unpaid debt obligations then filing bankruptcy might make sense. Once you file a claim your creditors will be prohibited from contacting you so long as their loan falls under the guidelines of the personal bankruptcy process.
• Asset protection – many states will allow you to shield valuable assets like a home or car so that you aren’t left with nothing after your claim has been filed. Further asset protection can be gained by filing under Chapter 13 rather than Chapter 7.
• A fresh start – filing bankruptcy can be an effective way to start over in terms of your financial outlook. Claiming bankruptcy on student loans can even end the nightmare associated with years of payback.
Unfortunately, there are several “cons” to consider before submitting a claim, the most significant of which are listed below –
• Damage to your credit – filing personal bankruptcy will essentially ruin your credit. To make matters worse, your credit rating will remain tarnished for up to 10-years after filing. What this means is that you will have trouble obtaining any sort of reasonable financing while the bankruptcy remains active on your credit report. You will even have trouble obtaining an unsecured credit card after bankruptcy unless you are willing to contend with exorbitant interest rates. Any financing after bankruptcy will come with high interest rates and strict terms. Click on the following link for information on bad bankruptcy credit mortgage.
Click here to learn how long does a bankruptcy stay on your credit report.
• Loss of assets – unless you can prove that certain assets are essential to your work, you will likely lose much of them during a Chapter 7 bankruptcy claim.
• Claiming bankruptcy twice is difficult – once you’ve filed bankruptcy, that’s it – at least for another 6 years. The law states that 6 years must pass between the end date of your bankruptcy term and another, new term.
• Certain types of debt are not covered – much of your debt will be liquidated by filing under Chapter 7, though not all of it. Debt like student loans and mortgage liens will still need to be addressed even after your bankruptcy has been approved.
As you can see there are a number of things to consider before deciding that bankruptcy is the best course of action. One of the best things you can do before making a decision is to meet with a qualified and reputable financial professional. While it’s certainly possible to meet with a bankruptcy attorney regarding your finances, keep in mind that most of these attorneys will have a bias toward seeing you end up in bankruptcy. While bankruptcy might indeed be your best option, you don’t want to walk to quickly past some of the other debt relief options that are available.
For more information on filing a bankruptcy claim and for more ‘going bankrupt pros and cons,’ please feel free to browse around our comprehensive site. Also, feel free to take our free bankruptcy evaluation to determine if bankruptcy is right for you.
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