Advantages and disadvantages of filing for bankruptcy
Filing for bankruptcy has become quite a common occurrence but not many know what it entails. Over the last few months, many businesses and businessmen have suffered losses that they could not cope with. This had led many to consider filing for bankruptcy as a feasible option.
There are various advantages of bankruptcy filing but you should know what you are really looking for. Filing for bankruptcy is more often than not a strategic endeavour and going into the process without doing your due diligence can lead to negative repercussions. Many people opt for a cheap bankruptcy filing without giving it a second thought, hoping that all their debt will be disposed. It is important to know that bankruptcy is not a sure shot solution to all your problems. Instead, it is a process that you set into place to handle all of your standing debts.
That being said, there are many advantages to filing for bankruptcy that you should know about. For starters, filing for bankruptcy puts all your debts on hold. This gives you a stay against your debtors and lets you be at peace for a while. The liberty of no more wage garnishments or property repossessions (at least until a further date) will buy you time to plan out a strategy for the future.
Building your credit score back up again is an integral part of the big picture plan and filing for bankruptcy allows you to do just that. The immediate effects of bankruptcy on your credit score may seem drastic but after a period of 7-10 years, you will reap the benefits of meticulous payments and punctuality. In addition, there are many exemptions and dischargeable debts that you could wash your hands off of after a chapter 7 or 13 bankruptcy filing.
While the upsides to a bankruptcy filing may seem lucrative, there are certain downsides to consider as well. There are also some Disadvantages of a bankruptcy that you should keep in mind . While in the long run, filing for bankruptcy allows you to rebuild your credit score, the initial filing does have a negative impact on your credit score. It will take the next 7-10 years to rebuild a good credit score. During this period, many banks will approach you with offers for lucrative ‘unsecured’ credit cards but these cards will have a high rate of interest attached to them. Additionally, there is a good chance that all your credit cards will be cancelled as soon as you file for bankruptcy. This is a measure taken by the court to ensure that you don’t accumulate any further debt while the court proceedings are going on.
One of the major downsides of filing for bankruptcy is that you won’t be eligible for any state, local, or federal tax refunds. You will also face considerable difficulty in obtaining new mortgages or loans as the bankruptcy goes on your record. Moreover, some of your debts such as your alimony or your student loans could still find their way back to you. These ‘non-dischargeable’ debts are debts that even a bankruptcy filing cannot discard, and you are obligated to pay these back sooner or later. It is advised that you do not opt for a cheap bankruptcy lawyer when dealing with a bankruptcy filing as these cases tend to be more complicated than anticipated.
For a quick and effective bankruptcy service proceeding, contact D’souza and Strachan Law. Here, you will find an experienced group of attorneys who are well versed in bankruptcy cases and can handle your case easily and effectively. For a consultation, call today. (Phone number)