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