Bankruptcy Pros and Cons

By Amber Deanwater

Most people consider bankruptcy as a very last resort, which is what it is meant to be. You should carefully and thoughtfully approach bankruptcy with a complete understanding of all the nuances associated with the bankruptcy process. It is important that you research and understand all possible outcomes to bankruptcy. The remainder of this article is devoted to a very brief summary of the pros and cons of bankruptcy.

As it becomes increasingly difficult to make ends meet, many people begin to think that bankruptcy may be a good idea. Before jumping into a decision like this, though, you should research what bankruptcy really is.

A person files bankruptcy when he wants to obtain some relief from an overwhelming amount of debt. This happens when a person cannot pay all of his bills and needs a fresh start. Additionally, this type of legal proceeding is normally launched voluntarily. If the debtor wants to have his debts discharged, he files Chapter 7 bankruptcy. If the debtor wants to reorganize his finances and keep his assets, he files Chapter 13.

The primary reason people consider bankruptcy is so they can begin anew. The completion of the bankruptcy will mean that the debtor can take a step back from the financial chaos that was consuming his life and start over. Thankfully, this means there will be no more threatening letters and phone calls. And, hopefully, the bankruptcy will leave the debtor in a position whereby he will be able to live within his means.

There are some misconceptions regarding bankruptcy. To begin with, you should not lose your job nor your social security benefits because of a bankruptcy. Additionally, your credit score will most definitely suffer, but it can be repaired.

It is important to note that as soon as your credit score plunges downward, you will find it extremely difficult to obtain any type of credit products. It is also important to understand that a bankruptcy can remain on your credit report for up to ten years.

Depending upon which chapter of bankruptcy you file, you may lose some of your assets. There are, however, some assets which are considered exempt. A bankruptcy attorney will discuss this with you when you meet with him.

Additionally, the cost involved needs to be considered. There is a filing fee for filing the case with the Bankruptcy Court as well as attorney's fees which can range from $1,000 to more than $2,000. Therefore, when the total debt is just a few thousand dollars, it may be best to just deal with your creditors than to file bankruptcy.

In conclusion, it would be wise to seek professional counsel from a seasoned bankruptcy attorney if you are thinking about filing bankruptcy. An experienced bankruptcy professional will be able to explain the process to you and guide you to the best outcome for your situation. - 31380

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