Bankruptcy Pros & Cons

Bankruptcy Pros & Cons

Bankruptcy Pros & Cons

Advantages:
1. A Fresh Start or a Start Over.
Bankruptcy allows for the discharge of Most debts. Sometimes due to job loss, medical issues or other circumstances debt has gotten too big to handle. The stress can be overwhelming and people need a fresh start. Examples of debts that are not dischargeable are student loans, income tax, debts resulting from criminal restitution.

2. Filing for Bankruptcy protects my assets from unsecured creditors.
Credit card companies can place judgment liens on homes. A bankruptcy prevents such a lien. If a lien is attached prior to the bankruptcy an experienced bankruptcy attorney can take action to remove the lien.

3. Bankruptcy stops wage garnishments, seizure of assets and foreclosure.
Once the bankruptcy is filed an Automatic Stay is instantaneously put in place. Creditors can no longer attempt to collect on their debt. Harassment to the debtor stops. Foreclosure is ceased.

Disadvantages:
1. Possible loss of nonexempt assets
While it is highly unlikely that a debtor will lose his or her home or vehicles since NYS provides ample exemptions to protect assets it is important that an analysis is done by an experienced attorney. For a proper analysis the debtor must disclose all assets and income.

bankruptcy foreclosure protection

Bankruptcy Pros & Cons

2. Affect on future credit
It is unpredictable what a bankruptcy filing will do to a person’s credit. The Fair Credit Reporting Act allows for a bankruptcy filing to be on a person’s credit for up to 10 years. How it affects your credit depends on the financial institution looking at your credit report. The decision to issue credit is based on the policies of the financial institution. Rebuild your credit by paying your utility bills, car loans and mortgage payments on time.

2a. Government bodies may not discriminate on the basis that a person filed for bankruptcy. b. utility companies cannot deny your service because you discharged their debt. They can however, charge you a security deposit.

3. You cannot file another bankruptcy for 8 years.
If a person is granted a discharge on $30,000 credit card debt and a month later is in the hospital and ends up with a bill of $20,000 that person must wait another 8 years to file Chapter 7 again. However, there are other options under the bankruptcy code. If a person knows of pending debts it is sometimes advisable to wait to file. Consult an experienced attorney.

Is Bankruptcy the right choice for you?

A few extra things to help you decide:
1. Did you do a budget analysis? How much is going to pay the minimum amount on your credit cards? Are you using the cards for groceries and gas because you don’t have enough after the minimum payments are made?

2. Do you have mortgage arrears? Do you owe back property taxes? If yes, call an attorney right away. Waiting too long will result in more bank fees, and possible foreclosure. Bankruptcy is a smart option.

3. Have you tried other options such as credit counseling? Are they working? Is your debt going down?

4. Have you consulted with an experienced attorney? Have you disclosed everything to your attorney so a good analysis can be done?

The Mansion Law Firm
We are a debt relief agency. We help people file for relief under the Bankruptcy code.