Bankruptcy is a difficult, stressful, and sometimes terrifying experience that people are unfortunately forced to confront. There are many reasons why someone might consider filing bankruptcy, including overspending, a loss of income, or escaping the burden of unforgiving debt.
Generally speaking, bankruptcy is not an easy way out, and it can have major consequences for all parties involved. However, there are some major pros and cons to be discussed before making a final decision on whether or not to file for bankruptcy protection. You can seek the help of a bankruptcy lawyer from The Harris Firm, LLC, to help you make the best decisions.
Major Pros of Bankruptcy
- Debt relief
When you file for bankruptcy, all of your debts are discharged. What does this mean? It means that if you tend to have expensive credit cards with high-interest rates, a mortgage with a high-interest rate, or student loans for school, you can stop paying those expenses and your creditors will no longer be able to legally enforce collection actions against you.
- No collections or repossessions
The biggest advantage to bankruptcy is that no creditor can legally contact you for payment or force collection actions. Repossession of your home, vehicles, or other property can be prevented.
- Quick and cheap processing
Although bankruptcy is never an easy or quick process, it is much quicker than most people think. It only takes a few months to complete the process, even if you have to go through the court system. Also, it is not very expensive. You don’t have to pay for bankruptcy from your own pocket. Instead, banks and other creditors will pay for the bankruptcy, and in turn you will be exempted from paying them back.
Major Cons of Bankruptcy
- Effects on credit
The average consumer has a hard time rebuilding trust after bankruptcy. A creditor may place a hold on your credit score for anywhere from seven to ten years. Additionally, bankruptcy can have long-term effects on your credit score.
- Not all debts are discharged
Not all debts are discharged when you file for bankruptcy. Some debts that remain include alimony, child support, unpaid taxes, student loans, and criminal fines.
- Loss of property
Unlike many other debt issues, when you file for bankruptcy, the state may repossess any and all property of value. This can include your family home, vehicles, and even your personal belongings.