Unfortunately, for reasons either in or out of their control, some people are faced with the difficult decision to file for bankruptcy. Due to a variety of factors, they are no longer able to manage their financial responsibilities, whether through illness, being laid off, or making poor choices with their money. When the heap of debt is too much to bear any longer, then a short-term solution that some choose is personal bankruptcy. It is a way to clear some debt and get situated once again. Often, it is the last resort of those attempting to get back on their feet, and if you are considering it, there are pros and cons of filing for personal bankruptcy.
It will likely pain you to hear it, but one of the cons of filing for bankruptcy is that you will probably lose the fun stuff you have acquired. Along with those items deemed non-essential, you will have to give up all credit cards. That is unless they have been paid off before the filing occurred. Although you are no longer able to keep extraneous items, the good news is that you no longer have to feel the pressure of collection actions taken by creditors. You also will not face repossessions, garnishments, or foreclosures.
Another con to filing for bankruptcy is that some assume that all debt is cleared. This is not so, and student loans are a good example. They do not go away, ever. Neither do back taxes from the previous three years. Granted, the student loans will have to be paid back eventually, but one of the pros of the situation is that aggressive collection actions on them will end. If filed through an attorney, the lawyer acts as a sort of shield against harassing calls and uncomfortable situations, but between credit counseling fees, trustee fees, and attorney fees, the cost can really add up.
One of the largest drawbacks of personal bankruptcy is the smear left behind on your credit rating. This mark will remain there for 10 years, and that will make the acquisition of additional loans either rather expensive or flat out impossible. This can present a significant problem, because both houses and cars are sometimes lost in a bankruptcy settlement. Looking at the positives, however, bankruptcy provides immediate help to enable you to once again obtain a house and a car further down the line.
Filing for bankruptcy is often a scary and painful choice, but it is an option that is meant to help. This help comes with a price, of course, most significantly a credit rating that will cause you hardship in the near future. In the long run, however, a huge pile of debt is cleared out of the way, leaving you with a clearer path towards financial recovery. As with many things in the world, there are pros and cons of filing for bankruptcy.
Related Reading : Bankruptcy
Source: http://www.portofhodiedah.com/personal-bankruptcy-advice-from-an-expert/
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