The Pros And Cons Of Bankruptcy – Know About The Pros And Cons
If you are considering bankruptcy, you should research all aspects of the process and the possible outcomes. This article is meant to be a very brief summary of the pros and cons of bankruptcy.
There are both pros and cons available for debt consolidation. A look at both the benefits and disadvantages is essential for the people. The meeting of the needs and requirements is possible for the home. The repayment of the personal and home loan is possible for the people.
As it becomes increasingly difficult to make ends meet, many people begin to think that bankruptcy may be a good idea. Before jumping into a decision like this, though, you should research what bankruptcy really is.
When you file a legal proceeding to have your debt discharged (Chapter 7) or to reorganize your finances (Chapter 13), you have filed a bankruptcy proceeding. A bankruptcy filing is normally done voluntarily and because the debtor is having trouble paying his creditors.
Essentially, people consider bankruptcy so they can start fresh. Once the bankruptcy is completed, the person will be able to start over with no harassing phone calls and knowing that he can live within his means.
We need to clear up some common and erroneous ideas related to bankruptcy. Some people believe that filing bankruptcy will cause you to lose your job. This should not be the case. Additionally, some people, probably the same people, believe that you will lose your social security benefits if you file bankruptcy. Again, this should not be the case. Lastly, there are those who believe that your credit report will be so damaged that it will never be the same again. It is true that your credit score will take an instantaneous hit by filing bankruptcy, however, with time and diligence, it can be repaired.
The major issue with declaring bankruptcy is that your credit score will be dramatically affected and will instantly plummet hundreds of points. Because of this, you will likely be denied for all credit products for several years, possibly up to ten years.
Something else to keep in mind is that, depending on the bankruptcy chapter filed, some of the debtor’s assets may be lost in order to pay creditors. However, some assets are exempt, thankfully. You should discuss the different chapters of bankruptcy and the possible outcomes when you meet with a bankruptcy attorney.
Another thing to consider is the cost involved. When you file a case in the Bankruptcy court, you will be required to pay a filing fee. In addition to this, there are attorney’s fees which can run $2,000 or more. Therefore, if your total debt is only a few thousand dollars, it would behoove you to consider working with your creditors to arrange a payment plan rather than considering bankruptcy.
Professional counsel from an experienced bankruptcy attorney should be sought if your are thinking about bankruptcy. A seasoned bankruptcy expert can guide you through the process and give you an idea of the expected outcome.