I have been receiving more and more questions on bankruptcy filing in the last couple of months, that is when the idea of doing an article on the basic advantages and disadvantages of going bankrupt came to my mind. I intend this article to become an easy guide for anyone who has ever wondered whether it would be beneficial for him or her to file. If you have ever found yourself in that situation, this is the guide for you. Read on and enjoy!
Filing for bankruptcy is know for leaving a huge stain on ones credit report and for somehow ridding one of ones debts. But believing that that is all it does, is ridiculous. There are many other aspects of bankruptcy filing, both positive and negative, which are not discussed often, and that is exactly what we are going to do here.
Advantages Of Going Bankrupt
This financial procedure offers many positive things, I will list them one by one.
1) So you are deep in debt and you are unable to pay it off. You have many options if this is your case. If you decide to file for bankruptcy, you will be paying less money than if you went for an informal voluntary agreement. Both carry different pros and cons, but this is something important to bear in mind.
2) Creditors can become an extreme hassle and put an enormous amount of pressure on you. Bankruptcy will put an end to their incessant harassment.
3) Another great thing of bankruptcy filing is that a third party (usually professionals in the administration ground) takes over your debt negotiations and payments. You will not be making any decisions on that field anymore.
4) You will get a fresh financial start, which is invaluable.
5) Those filing for Chapter 7, will be discharged from most of their unsecured debts.
6) After the bankruptcy is finally discharged, your debts will no longer be on your credit report. You will be able to begin rebuilding your credit and will even be able to apply for loans.
Disadvantages Of Bankruptcy
Like any typical financial move, it does have negative things. Whether they are significant for you or not, depends on your particular situation.
1) In case you are a homeowner and you have some equity on your home, it will most likely be sold.
2) All of your financial affairs will be investigated whether you allow it or not. Provided that any irregularities are found, you may face criminal charges.
3) If you have a business, or part of a business (partnership), it may be sold.
4) You may lose most of your high valuable assets. Not all of them, of course, the law protects certain types of assets from being taken.
5) You will have to wait until your bankruptcy is discharged to apply for a loan.
6) Going bankrupt can be expensive at time as all of the fees will be taken from your assets.
7) Some debts cannot be written off, for instance: child support, student loans, court order debts, fines, etc.
As you can see, there are both advantages and disadvantages of filing for bankruptcy. Whether it will be beneficial for you to file or not, depends on your particular situation.