In America, we tend to shame the idea of filing for bankruptcy as a means to escape insurmountable debt and get a clean slate. There can be the popular notion that you need only to work harder and ‘pull yourself up by your bootstraps in order to get back on your feet. But, for a lot of people, the world just doesn’t work that way. Many times, our attempts to escape debt only end up creating more debt. Sometimes, the only way to get out from under the crushing weight of debt is to consider filing for bankruptcy.
But the decision to enter bankruptcy should not be taken lightly. Please first consider the pros and cons of such a major decision.
What Are the Pros of Bankruptcy?
Bankruptcy needn’t be thought of as a terrifying possibility. There are many upsides to bankruptcy, including:
- You may be able to escape certain insurmountable debts, dismissing your need to repay the money on credit card debt,
- Your credit rating may even improve after you file.
- Creditors will no longer be allowed to contact you by phone, mail, or email, ending their threatening collection efforts.
- In some cases, you may not lose anything of huge value, and could be able to hold onto your car, your real estate property, life insurance policies, pensions, retirement plans, and household goods valued up to $10,000.
- Old tax liabilities may go away.
- Obtain a fresh new start.
What Are the Cons of Bankruptcy?
The decision to file for bankruptcy should not be made on a whim. There are some risks that go along with bankruptcy and those risks need proper consideration.
- Your credit card will be canceled, and it could take some time to get a new card.
- Bankruptcy will remain on your credit report for seven years.
- Insurance premiums may go up.
- Could have a negative impact on employment possibilities and housing options.
- It can be hard to get a new mortgage in the first two years after bankruptcy.
- Student loan debts, child support debts and certain tax debts are exempt from bankruptcy forgiveness.
- While your home may be safe, you could lose any additional real estate property and any luxury possessions.
When Should You Speak with a Bankruptcy Lawyer?
Try not to feel defeated. Our economic system is flawed and has a tendency to eat people alive, no matter how hard they might work. Bankruptcy might very well be an option of last resort but that doesn’t mean you should view it from an entirely negative perspective.
To learn more about whether filing for bankruptcy is the right option for you, it is important to speak with a lawyer experienced in bankruptcy and estate planning needs.