For many people, filing for bankruptcy relief provides a workable solution for helping individuals get out of debt and making a fresh financial start. For others, declaring bankruptcy can feel like a punch in the gut. For them, the stigma attached to publicly admitting their financial difficulties and figuring out how they can rebuild their credit rating and secure loans is too much to handle.
Every person’s financial situation is different, and there are almost always extenuating circumstances that must be considered before making a final decision on whether to file for bankruptcy protection. Bankruptcy can be a scary and complex process to consider. That’s all the more reason to seek advice from an experienced legal professional who is familiar with the process and the laws governing bankruptcy.
What are the pros and cons of filing for bankruptcy protection?
- Once your bankruptcy papers have been filed and processed by the court, an automatic stay will be granted, prohibiting creditors from taking further action against you.
- In other words, creditors cannot call you, you can’t be sued, and the bank can’t foreclose on your home or repossess your property.
- In some cases, you might be able to have nearly all of your debt discharged (utility bills, medical bills, credit card debt, some personal loans, etc.).
- Depending on the filing, you may be able to keep most of your assets as long as you can meet the payment plan mandated by the court.
- State laws vary, but some states provide exemptions that allow you to keep many of your possessions.
- Bankruptcy will lower your credit score for the foreseeable future.
- You will lose your current credit cards.
- Some debt will not be discharged, such as student loans, child support, alimony, fines owed to government agencies, and more.
- It will be extremely difficult to secure a loan or mortgage for several years.
- Your name will be made public in court records.
- It could negatively affect your ability to be hired for a new job or rent a home for your family.
- The bankruptcy process – filing fees, bankruptcy trustee fees, credit counseling fees and attorney fees – is not inexpensive.
These lists are not exhaustive. As you can see, there are many factors that must be considered before filing for bankruptcy protection, as an attorney, like a bankruptcy lawyer in Waterbury, CT from a firm such as The Law Offices of Ronald I Chorches, can explain.