Filing bankruptcy can come with a bunch of pros and cons with it. It is essential to understand whether those pros and cons make sense to a particular filer. By carefully viewing and understanding the pros and cons, one can make a wiser decision about whether to opt for bankruptcy or not. Find more such bankruptcy-related facts on https://www.recoverylawgroup.com/bankruptcy/.
What are the advantages of filing for bankruptcy?
The advantages of filing bankruptcy can be listed as follows-
- Instant relief from the debt retrieving procedures
Often when you are lagging the payments, the lenders start to foreclose or use other tactics to apply pressure to recoup their money. This can be extremely stressful and traumatic especially when it is for an asset like a home or even a car. Applying for bankruptcy ensures immediate relief from such retrieving procedures.
- A restart or reboot of your financial situation
It can facilitate a good opportunity to mend the previous financial errors and make a corrective start with a new beginning altogether.
- Chance to preserve the basic assets and savings
No matter how much the debt is the court provides the chance to safeguard basic assets using exemptions. Also, with Chapter 13 or Chapter 11 an individual or a business can safeguard almost all the assets. This cannot be possible if bankruptcy is not declared. The filer might end up losing a lot of basic assets including the home due to foreclosure or the lender’s lien.
What are the disadvantages of bankruptcy?
The disadvantages of the bankruptcy can be listed as follows-
- Impact on credit score
Filing for bankruptcy can impact the credit score for 7-10 years. It might be very difficult to correct the credit score after declaring bankruptcy. It impacts severely on the ability to take debt especially unsecured debt in the future. Availing credit can also prove costlier due to the credit score impacts.
- Undergoing bankruptcy court-mandated counseling and learning
As part of the bankruptcy procedure, the filer should complete a credit counseling course from an approved agency before applying for bankruptcy. Apart from this counseling, before the bankruptcy discharge or judgment is availed, the filer should also complete a financial learning course to ensure he/she is much wiser once the bankruptcy procedure is completed. This can be a drawback or an advantage depending on how a filer sees it.
- Limit on the discharge of debt
The discharge of debt is not an everyday affair and it might seem lucrative for one to keep filing for bankruptcy every now and then if debts are discharged every time. To minimize this and prevent misuse of the discharge of debts, there is a seasoning period or a cool-off period for the repeat bankruptcy filer to avail of a discharge. A filer might not be able to avail a discharge for the next 4-8 years depending on various situations.
The above list can have a few more additions in both sections depending on a case-to-case basis. To ensure your case of bankruptcy is worthy enough to pursue, consult with top attorneys of Los Angeles & Dallas, TX at 888-297-6203 now.