Declaring Bankruptcy

Declaring Bankruptcy

The pros and cons of declaring bankruptcy

When it comes to declaring bankruptcy, it’s not an easy decision. It has a major impact on your reputation, your future credit and your image in the eyes of your friends and family. However, going bankrupt could provide some temporary relief from the creditors who keep calling you. When the debts are paid off, it can give you a certain peace of mind. However, it is the aftermath of how things re affected which can make people consider whether they made the right decision by declaring bankruptcy.

The following are a few pros and cons of declaring a chapter 7 bankruptcy.


The pros of declaring bankruptcy

  • While a bankruptcy can be found on record for several years, the process takes only about three to six months. Often avoiding bankruptcy when it may be the right decision for you would negatively impact the repossessions and the lawsuits in the future, also explaining the decision to not go bankrupt to a future lender is by no means an easy one.
  • Also there are state exemptions which would allow you to keep some of your possessions. So that means you won’t have to give up all the assets which you own. You would also get to keep the salary which you earn at the end of each month and you wouldn’t have to part with the money ever so often.
  • You would also have an option of getting new credit three years after the bankruptcy period. Though you might get it at a much higher rate, nevertheless you would get a chance to rebuild your future.
  • Also you would be able to find lenders who specialise in lending cash to bad risks. Though thus is by all means an unfair way of calling someone who made a few bad decisions.
  • While you can only opt for filing a chapter seven bankruptcy once in six years, you still have an option for opting for a chapter 3 bankruptcy before another disaster strikes.
  • You would be able to get rid of most of your financial burden. Nothing is more disturbing than having creditors keep calling you to pay off the debt. When you file for bankruptcy most of your assets are sold to pay off the creditors.
  • It help people stop from taking serious legal action against you.

The cons of declaring bankruptcy

  • A bankruptcy would have a negative impact on your credit score, it may become difficult for you to obtain future credit.
  • You would lose your property and some of your luxury possessions.
  • You would also lose your credit cards
  • It would also make it impossible for you to get a mortgage
  • Also keep in mind that declaring bankruptcy wouldn’t exempt you from paying alimony or child support.
  • It would also not help you get rid of the student loan debt
  • You would have to provide all the details to your trustee and the judge about how you got to get into such a financial mess.

The choice for declaring bankruptcy is one which is quite complicated. You should hire an attorney to help guide you through the entire process.

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