Here’s What You Need To Know About Filing For Bankruptcy
There are pros and cons of filing for bankruptcy. Keep in mind different laws apply, depending on where you live.
Pros of Filing For Bankruptcy:
- You are relieved from your debt (Restrictions apply)
- Emotional relief – Being overwhelmed with bills, you can’t pay can make you an emotional wreck and keep you from functioning at home and work.
- Relief from bill collectors – There is nothing worse than having bill collectors continuously call you and demand payment when you know you don’t have the means to pay. Once you file, an “Automatic Stay” will be put in place, meaning people and companies you owe money to can’t make attempts to collect from you.
- Fresh start – Once you are through the process, you get a fresh start and have the opportunity to rebuild your credit. It’s not easy, but you do have the chance to start over.
- More in the resources section of this post
Cons of Filing For Bankruptcy:
- Not all your debt is eliminated. Outstanding debts may include:
- Back taxes
- Student loans
- Alimony and child support
- Government Fines
- You could lose all your non-exempt property, which may include your home, vehicles, cash, stocks, and bonds.
- Filing for bankruptcy also leaves a stain on your credit history that can last from seven to ten years.
- The cost of filing for bankruptcy can add up quickly. You may need to pay fees related to credit counseling, attorneys, trustees, etc.
- Once your debt is cleaned up and you want to get a fresh start, it may difficult to get a mortgage or to be approved for any loan. If you do get a loan, your interest rate likely will be high because you’re considered high-risk.
- More details in the resources section below.
Choosing Whether Or Not To Go Bankrupt
The way I see it, there are two reasons to consider bankruptcy. A person may consider bankruptcy because there is no other option, or as an easy way out of massive debt.
Bankruptcy is something no one wants to go through. Whether you should file for bankruptcy is an important decision that will affect your financial wellbeing. Not only does it affect you, but it affects your family, friends, your lifestyle, and those who you borrowed money from.
You need to think of it as borrowing money from people and not companies. Even though they may be multi-billion-dollar companies, you are still dealing with people.
There is a debt you agreed to pay, but you may have no choice, and the debt is too large to pay off. It could be due to careless overspending or because of a loss of income, or it could be an unforeseen change that you don’t have control over.
The Purpose of Bankruptcy
Events beyond your control are one of the reasons behind the creation of bankruptcy protection laws. For example, you lose your job because the economy is slow, and you can’t find another job that pays what you were making. You own a business, and the nearby factory that you supply has gone out of business, etc.
Without bankruptcy laws, I suspect a lot of the businesses around today would not have been started because of the risk involved. If someone starts a business and things go bad, they do have bankruptcy protection, and it’s that protection that allows more people to try and make it in the business world.
Getting Professional Help
This post offers in-depth resources that will give you the information you’re looking for. I suggest you speak with a professional to get the right information for your situation.
For example, there are different types of bankruptcies, and each has pros and cons and processes to follow, and this is one area a professional can help with.
Types of bankruptcies
- Chapter 7 — Used when you are prepared to liquidate all your assets
- Chapter 11 — Used for reorganization
- Chapter 12 — Used for family farms
- Chapter 13 — Used when you want to have a repayment plan in place
- Chapter 15 — Used for foreign cases
Note: Chapter 7 and Chapter 13 are used the most in the United States
Choosing which is the best option for your situation is where professional help can come into play. You want to find someone who is not trying to sell you a service but looking out for the best route to take for your situation. A professional may advise you not to declare bankruptcy but to take another route.
In addition to the information in this post, you’ll find a lot of information related to filing for bankruptcy.
The benefit of including work from other authors is you’ll get a strong overview of what you need to know about bankruptcy, all located from one post.
Take some time to go through the information, so you gain a strong overview of the process.
Should You File For Bankruptcy
The Pros And Cons of Filing For Bankruptcy
Choosing A Bankruptcy Lawyer
Chapter 13 Bankruptcy
Chapter 7 Bankruptcy
Questions and Answers
The Latest about Filing For Bankruptcy
In this section, you’ll be able to stay up to date on the latest related to filing for bankruptcy, including the latest news, Google searches, videos, what people are tweeting, and more.