Thursday, May 3, 2012

The Pros and Cons of Filing for Bankruptcy

As with most things in life, there are advantages as well as disadvantages in filing for bankruptcy. This short list can help you balance the pros and cons to make a decision that is right for you. Since no two debt situations are exactly alike, there is no one-size-fits-all solution to problems. While bankruptcy is considered as a last resort for some, there are still several factors to consider before filing one. These include how much debt you are in, your ability to pay the debt off,and the kinds of debt you owe.


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Ten Years After Bankruptcy

Of course, the bankruptcy stays on your credit report for ten years, and for the rest of your life you'll have to check that box on credit applications that asks if you've ever been in bankruptcy. But there is an upside to this. Most people already have a history of late payments, possibly repossessions and other negative marks on the credit report. Bankruptcy is a chance to wipe this slate clean and begin to rebuild a new, better credit rating.

Bankruptcy and Property

During bankruptcy, there is only so much property you'll be allowed to keep. You may have to give up some things. However, in most states people who go through bankruptcy can keep their home, a car to get to work and back, household items, clothing and other personal essentials. If debt is ruining your life, some sacrifices may be worth it. Don't assume you'll lose anything, however. Ask a qualified attorney at about the things could happen to your property. Sometimes bankruptcy is a way to get a fresh, new start.

Filing for Bankruptcy...Again

Once your bankruptcy is discharged, you are ineligible to file for bankruptcy for the next six years. While this seems like a negative, most people find it is a positive thing. These years force people to learn to live within their means and make things work without taking on massive amounts of debt. Once people are no longer paying hundreds or thousands of dollars each month to credit card companies, they find it's easier to build a savings account and get in a better financial situation.

Types of Debt Bankruptcy Eliminates

Certain debts, such as income taxes, student loans, child support and alimony cannot be erased by bankruptcy. However, once credit card payments and loan payments are erased, making these other payments is far easier. If your student loans are the cause of your financial stress, bankruptcy is, unfortunately, not your answer. But each situation is different. Speak to a bankruptcy attorney to find out how you can benefit from filing for bankruptcy.

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