Filing for Bankruptcy - The Advantages and Disadvantages
- Author Liz Roberts
- Published February 26, 2010
- Word count 461
This article discusses the advantages and disadvantages of bankruptcy and how it can affect your decision on whether to file for bankruptcy or not.
The advantages of bankruptcy
If bankruptcy has been filed for the right reasons, it does have advantages. Fist, it releases the borrower from the stress of having creditors constantly demanding repayment. In fact, some creditor are known to harass borrowers and such undignified treatment may rob your peace of mind and your privacy.
Once you have finally filed for bankruptcy, all creditors are no longer allowed from contacting you or from pursuing any kind of debt collection practice.
Once you get approved for a Chapter 7 bankruptcy, you can be free from all your debts. This only means that you can have a fresh start once again and have a life that's free from the burden of repayment.
If ever you do not qualify for Chapter 7 bankruptcy, a Chapter 13 bankruptcy would put you under a repayment plan. A certain percentage from your monthly salary will be deducted as payment for your debts. Even if Chapter 13 does not completely free you from obligations, undergoing a bankruptcy repayment program can still be a great help in managing your debts.
The disadvantages of bankruptcy
Are there any negative effects when filing for bankruptcy? What are the consequences once you have chosen to file for bankruptcy?
Basically, a bankruptcy record is a derogatory mark that will stay on your credit report for 7 year. Imagine how insurers, future creditors, landlords or potential employers would react if they find out that you just went through bankruptcy. The road to recovery can be a slow process, even if your credit rating and status can be improved over a period of time.
Going through a bankruptcy procedure also requires a considerable amount of money and time. Nowadays, you must hire a bankruptcy lawyer in order to prepare your bankruptcy documents. Usually, your best choice would be hiring an attorney who will ask for a considerable service charge.
Are you guaranteed to get an approval after filing for bankruptcy? Under the new bankruptcy law, you have to pass the "Income Means Calculation Exam" in order to find out if you are qualified for Chapter 7 bankruptcy or Chapter 13 bankruptcy.
Take note that in case you failed o qualify for Chapter 7 bankruptcy, you can still qualify for a Chapter 13 bankruptcy that will put you under a 5-year debt.
Should you consider filing for bankruptcy?
Your credit counseling agency must help you decide if filing for bankruptcy is suitable for you. If your credit counselor advises that you go for the alternative steps instead, then, you have to be cooperative. You must be prepared to take the challenge of being able to resolve your debts even without filing for bankruptcy.
Liz Roberts is a freelance writer and loan consultant. The website BadCreditResources.com offers resources that specialize in providing bad credit loans and credit cards for bad credit.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- Non resident Mortgages in Spain
- Effective Strategies for Paying Off Your Mortgage Faster
- How Does Equity Release Work?
- Florida First Time Homebuyer: The Indispensable Guide of Tips, Programs, and Resources
- How to Become Debit Free?
- Sellers Concession the Closing Cost Option
- Financing Short Term rentals with DSCR loans
- Why move to Roseville CA
- Simple Interest Mortgage Advantage
- Are Low Doc Commercial Loans available in Australia
- How to Obtain a Rural Agriculture Loan Quickly and Easily
- What is a Caveat Loan?
- Tips for improving your Credit Score before getting a Home Loan
- 3 Things To Look out for With An Equity Release Mortgage
- Manage your Debts by Refinancing your Current Home Loan
- How to Get a Home Loan with Unusual Employment or Income?
- 20 Effective Debt Consolidation Loans Tips with Bad Credit
- Tips for Choosing a Non Conforming Lender
- Why is a Good Credit Rating Important in Australia?
- Most Common Ways That People Fall Into Personal Bankruptcy
- How to Choose a Consumer Credit Counseling Agency?
- Consolidate Your Debts and Take Control of Your Finances
- How to get a Home Loan due to a Bad Credit Report
- Debt Consolidation Home Loans are a Solution to Multiple Debt Problems
- Facts You Should Know About Low Doc Home Loans in Australia
- No Doc Loans from Private Lenders
- Home Loans to Consolidate Debt for People with Bad Credit
- How Can I Get a Mortgage If I Have a Bad Credit History?
- Guidelines to Fix Bad Credit Effectively Through Dispute
- Dealing with Debt – What to know about Debt Consolidation