June 21, 2012

What are the pros and cons of filing a bankruptcy?

If you want to know what is in store for you, when you are about to file a bankruptcy then you can visit Trenton Bankruptcy to know the details. Unlike the popular notion, there are quite some advantages that bankruptcy can provide you. However, it is true that bankruptcy should be your last option when it comes to debt relief.

What are the advantages of filing a bankruptcy?

Once you file for a bankruptcy, all the ongoing legal actions against you along with the collection of debts are going to stop. This is known as the automatic stay. Your creditors cannot start any new legal action against you once you have filed a bankruptcy and also they can only contact your bankruptcy attorneys henceforth regarding any matter of collection of your debts.  Most of the liabilities that has to do with your credit card debts, past-due accounts, civil judgments and judgments due to repossessions and foreclosures might be discharged. You might be able to keep all or most of your properties through property exemptions, be it federal or state. You can avoid certain liens and also wage garnishment if you take timely action about filing your bankruptcy.

What are the disadvantages of filing a bankruptcy?

It is a wrong notion that bankruptcy clears all your debts.  There are certain debts that cannot be discharged through bankruptcy such as government fines, taxes, child support, alimony, criminal conduct or fraud, majority of student loans and drunk driving. If you have security interest in a home or in motor vehicles, your creditors may be able to repossess their collateral after the bankruptcy process is over unless you can reaffirm your debt or redeem the collateral.  Your bankruptcy filing is a public record and comes out in a section of the newspaper. Along with this the record will remain on your credit report for at least 10 years. This can make getting a loan or a mortgage extremely difficult for you. You have to pay very high interest rates for credit cards as well. You can file for a bankruptcy discharge only once in every six years. Bankruptcy can also create an image for you which is that of a financially irresponsible individual. This will create difficulty for you in the job field, especially if it is related to finance.

Thus be careful before you file for a bankruptcy.

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