In 2017, over 765,000 people filed for bankruptcy. If you are considering it, know that you are not alone. For some people, it's the only way to salvage their finances. For others, though, it's not the best idea.
Keep reading to learn more about the pros and cons so you can make the right decision on whether you should file for bankruptcy.
Filing for Bankruptcy: Pros
Whether you file Chapter 7 or Chapter 13 bankruptcy, the most significant benefit is that most of your debts are discharged/cancelled.
If you file for bankruptcy, creditors, lenders, and collections agencies can no longer contact you. Once you start the process, no one can contact you to collect any debts or harass you. Filing a bankruptcy case creates an automatic stay, that can also stop a foreclosure or repossession while you go through the process.
Filing for bankruptcy won't result in you losing everything to pay off your debt either. There are laws that restrict what the courts can liquidate to pay your debts. Your house, cars, jewelry, and other personal items cannot be liquidated, for example.
Overall, there are some significant positives of bankruptcy. The vast majority of your debts are no longer burdening you and what you will have to pay back will be much less than the original debt amount.
Filing for Bankruptcy: Cons
While bankruptcy clears many of your debts, it's not without its negatives. Before you embark upon a bankruptcy filing, you need to understand the process and the outcome to make sure it's worth it for you.
Filing for bankruptcy will stay on your credit report for 7-10 years, making it difficult, but not impossible to get a mortgage, car loan, etc. You may also have to give up your credit cards, which could prove difficult with some purchases, like hotels or car rentals.
Not all of your debts get discharged. In addition to student loans, back taxes, alimony and child support, and any governmental fines cannot be forgiven in most cases.
The bankruptcy process is not cheap and can be complicated. There are multiple forms to file and you have to pay filing fees, trustee fees, and fees for credit counseling. Unfortunately, you'll have to spend some money to have your debts forgiven. To ensure you are filing the correct forms, and not making any costly errors, it is highly recommended you have an expert by your side during the process.
Contact The Law Office of Marilyn D. Garner
It's not advisable to take on the bankruptcy process on your own. If you decide to file for bankruptcy, an experienced attorney can help you understand the process and make sure you get the best outcome possible.