When it comes to making the decision of filling for bankruptcy or not, there are a lot of things that you might want to take into consideration. There is a lot more that goes into bankruptcy than simply clearing all of your debts. In fact, there are a lot of consequences.
Here are some of the pros and cons of filing for bankruptcy:
- The main pro when it comes to bankruptcy is the fact that your debts are discharged – this means that you no longer are responsible for them, as they are forgiven.
- When it comes to being unable to pay your bills, there are a few options: Firstly, you may have these debts legally waived, secondly, you could file for Chapter 13 which allows you the ability to re-organize your debts into a single monthly payment. This process can make the process of repaying your debts easier, and more manageable.
- After you file for bankruptcy, the courts will also put a stay on your debts, which means creditors can no longer make collection attempts on you – which will put an end to harassing phone calls, letters and e-mails.
- While there is a popular myth that when you file for bankruptcy you lose everything, this is simply not true. Under federal, as well as state laws, there are such things as bankruptcy exemptions. This means that there are assets that cannot be seized during a Chapter 7 bankruptcy filing. Some of these items include your home, clothing, and other personal belongings.
- As well, under law, you are not allowed to be discriminated against by your employer for filing for bankruptcy.
- While filing for bankruptcy will help you out of debt, it does not wipe out all of your debt. You will still be responsible for paying your most recent back taxes, student loans, alimony/child support, as well as government fines.
- While there are exempt property rules, you will lose all your non-exempt property which could include cars, cash, stocks, bonds or even your house – depending on the circumstances.
- Bankruptcy leaves a mark on your credit score for 10 years, which could drastically reduce your odds of getting a loan, or, at least, require you to have much higher interest rates on loans or even credit cards.
- Bankruptcy is also not cheap. Filing fees, trustee fees, credit counselling, and attorney fees can all add up over time.