Disadvantages and Advantages of Filing for Bankruptcy
The most obvious disadvantage of filing for bankruptcy is that it will ruin your credit for at least 7-10 years. Some other disadvantages include:
- Losing credit cards
- Losing non-essential possessions
- Inability to obtain a mortgage for some time
- Embarrassment
- Not all debt will be discharged
When filing a bankruptcy there will be certain categories of debt that may not be wiped out including:
- Past due child support, alimony payments, and other debts resulting from divorce settlement agreements or divorce decrees
- Student loans except in certain exceptional circumstances
- Income taxes that are less than 3 years past due
- DUI judgments against the debtor
- Debts incurred by fraudulent means, such as writing a bad check or providing false information on a credit application
If a large portion of the debt is non-dischargeable, it may not make sense for the debtor to file for bankruptcy.
The advantage to filing for bankruptcy is that as soon as a debtor files for bankruptcy, there is an automatic stay and most creditors must stop their collection efforts. Thus, the debtor can begin rebuilding his credit; financially-speaking, the debtor can start over.
It is true that filing for bankruptcy ruins a debtor's credit from a number of years and may cause embarrassment. However, incurring more debt and facing the harassing phone calls, letters and potential lawsuits from creditors can have the same effect. Filing for bankruptcy will allow many debtors to get started sooner on rebuilding their credit in peace.
Certain categories of property may not be taken by creditors after a debtor files for bankruptcy. The type of exempt property will vary from state to state but typically includes motor vehicles up to a certain value, some clothing and household furnishings, life insurance and portions of earned wages.
Disadvantages and Advantages of Filing for Bankruptcy
***Note This page is an Archieve of Publicly released information either through our company or another Press Release organization. We do not "fact check", "Support", nor "Dispute" any of the information provided to us. We are a distribution point and Historical press release research and search service. This information only represents the fact that at one point in time the release was distributed to 1000's of publications both online and off. PRNewsNow will not take sides in any personal or commercial disputes you have with the writer of this press release. We will defend its right to exist blindly and without regards to its political, commercial or personal implications.***
