Finding yourself in a position where you cannot pay your bills anymore and are on the verge of losing assets and having bad credit is not a good place for anyone. If you are there, though, you might consider bankruptcy. Bankruptcy has its pros and cons. Before you use it, you should take the time to think about the advantages and disadvantages of using this method for debt-relief purposes.
The Pros of Bankruptcy
You can typically narrow down the advantages of bankruptcy to four primary pros.
The first is the relief you receive from the automatic stay. When the court issues the automatic stay, you no longer must deal with your creditors. They will not call you or send you letters after this. They legally cannot contact you with any method.
Two, you get time to find a solution for your debt problems. The automatic stay gives you time, but the case, in general, does as well.
Three, bankruptcy either offers a discharge of your debts or a repayment plan. In either case, you have a way to pay off or eliminate the debts you have. This benefit is the main reason people pursue bankruptcy. They need assistance with their debt, and bankruptcy provides it to them.
Finally, bankruptcy provides a way to clear the slate. With either branch, you will receive a fresh start.
The Cons of Bankruptcy
Next, you should evaluate the downsides to using this option. There are three main ones to learn.
One, you risk losing things you own. There is a chance with a Chapter 7 case that you will have to surrender valuable assets to the court. This is not a guarantee, but this is always a possibility in a bankruptcy case.
Two, the bankruptcy plan might not provide relief for every debt. You may have a debt that does not qualify for a discharge. If so, you would still be responsible for paying the entire amount.
Three, a bankruptcy case stays on your credit record for up to 10 years. Some people see a drastic decrease in their credit scores after filing for bankruptcy. Others, though, do not see a significant difference. It really depends on where your score is when you file.
As you compare, contemplate, and review these things, you will likely see that the pros outweigh the cons. In either case, though, you can learn more about the process by visiting a bankruptcy attorney.