A Bankruptcy Lawyer’s Blog

Pros and Cons of Filing Bankruptcy

Before filing for bankruptcy, you must be aware of its advantages, disadvantages, and the consequences it may have in the future. It is a big decision to make and it can have a lasting impact on the financial aspect of your life. It is best to seek the help of a financial adviser or lawyer so that you can be sure that you have understood everything about it. Here are some of the pros and cons of filing for bankruptcy.

Advantages

Of course, the biggest advantage (and the main reason) for filing for bankruptcy is that you will be discharged from all your eligible debts. As a result, the burden of obligation will be lifted off your shoulders. This will then allow you a fresh start and a chance to manage your finances better. Collection efforts by your creditors will stop once you file for bankruptcy, and a provision will be set by the court to prevent them from claiming your assets. You also can not be fired from you job on the sole basis that you have filed for bankruptcy.

Disadvantages

Filing for bankruptcy may be a good idea for a chance at a fresh start but it is not without disadvantages. For one, it will reflect on your credit report for ten years or more which will make it hard for you to get credit. This will also mean it may be impossible for you to get financing. Once you are discharged from your debts, you will not be able to obtain a discharge for another six years. Any new debts you incur after filing for bankruptcy will be exempt from discharge. If you have a co-signer when you incurred a debt, the co-signer will be made liable for the entire debt (except for a Chapter 13 bankruptcy).

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