Finance 101: What are the pros and cons of bankruptcy?

bankruptcy

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“Bankruptcy” can sound like a negative word. It’s scary to lose everything that you own just because you cannot repay your creditors anymore. There are many misconceptions about bankruptcy. It should not be your immediate choice but can be a reliable debt-relief tool. It is a huge financial decision, and if you believe that you need advice, talk to a Charleston, WV bankruptcy attorney without delay. A good lawyer can evaluate the pros and cons of your decision and explain the difference between Chapter 7 and Chapter 13. Here are some basic bankruptcy aspects at a glance.

The pros

  • Bankruptcy will initiate an automatic stay. Your creditors cannot contact or harass you for payments anymore. If you have hired a lawyer, they can communicate with everyone concerned on your behalf.
  • Bankruptcy may allow you to retain your home and delay foreclosure. Depending on your circumstances, you can retain personal belongings too. If you can pay for the mortgage, you don’t have to lose your house.
  • Bankruptcy can help you start afresh. Yes, the decision will impact your credit score for years, but you have a blank slate and can work on your financial situation from scratch. This can minimize your stress too.
  • You don’t have to worry about creditors taking legal action against you. Except for secured debts, bankruptcy can prevent further legal complications that can drain you financially.
  • Unless you have joint debts, bankruptcy will not affect your partner. You don’t have to worry about their financial security.

On the flip side

  • You will lose some of your assets. If you file for Chapter 7 bankruptcy, your assets will be used to repay your creditors.
  • You may have a hard time getting loans. Bankruptcy does impact your credit report, so you may not qualify for a mortgage soon. Even for personal loans, you have to pay higher interest rates.
  • Bankruptcy records can be accessed. While you may not tell people, but it is not hard to find details.

Consult a bankruptcy attorney

You have to work with a bankruptcy attorney to avoid complications. Attorneys know the legal process and can help in avoiding mistakes that can impact your financial situation adversely. More importantly, they can take over and handle the complicated paperwork necessary for initiating the process. If you can get debt relief in other ways, your attorney can also offer advice on those aspects before filing for bankruptcy.

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