In certain circumstances, advantages to filing for bankruptcy more than outweigh alternatives. Every case is different, so if you’re considering debt relief, it’s always a good idea to contact an attorney for bankruptcy advice. Understanding how bankruptcies work, timelines involved, and qualifications are essential.
Most people cringe at the thought of bankruptcy, but it’s not necessarily a bad thing. Understanding the bankruptcy process takes some of the stigma away and helps individuals deal with unforeseen life events such as overwhelming debt and no foreseeable way out in the near future.
While bankruptcy can relieve overwhelming debts, it’s important to be aware that not all debt is covered under bankruptcy laws. Meaning you shouldn’t file for bankruptcy just because you’re tired of paying your bills. If you’re making enough money to pay your bills, filing for bankruptcy is ill-advised.
When considering filing for bankruptcy, research both pros and cons and consult a bankruptcy attorney to determine whether you qualify and will benefit from it.
Alternatives to filing for bankruptcy not always ideal
Situations over which you have no control can lead into a downward financial spiral. Life-changing events that include losing your job or experiencing an injury that prevents you from working, along with massive medical bills that come with it are just examples of the types of events that leads many to consider bankruptcy.
Making the decision either way is difficult. Individuals going through hard times often turn to a bankruptcy filing because there’s no other way out, to be considered only as a last resort.
While you might try to negotiate with credit card lenders and banks, you may be pressured into selling or depleting valuable assets, even those that you’ve saved for retirement. Depleting retirement savings to settle debt is never a good idea. While this alternative might help you catch up on past-due bills, such drastic measures leave you nothing to rely on for future needs. In such cases, filing for bankruptcy can prevent financial catastrophe.
Some individuals turn to debt settlement companies to settle debts. These companies deal directly with your creditors. In some cases this works out, but in others can leave you worse off than before.
Bankruptcy filing due to life-changing events does come with a downside. For one, your credit rating and score will be negatively affected, and your bankruptcy filing will negatively impact your credit for at least 7 years. However, by the time someone files for bankruptcy, credit ratings are usually typically poor due to late or missed payments.
Advantages to filing for bankruptcy
Filing for bankruptcy can be a good idea when you’ve looked at other alternatives and don’t see any options to reasonably relieve your debt burden. Bankruptcy options may also be beneficial if you have debt secured by property such as a home, a mortgage, or car loans. Lenders can legally foreclose on your home or repossess a vehicle if you default on such obligations. Depending on situation, bankruptcy can initiate delays or stops on foreclosure and/or repossession processes.
However, be informed. Learn what types of debt – known as priority obligations – will be discharged or “erased” and which can’t.
Filing for bankruptcy is a good idea for those struggling with debt because it provides a clean slate and a fresh start. It’s a difficult decision, and while every situation is different, it’s always important to consult an expert when weighing the pros and cons of bankruptcy.
For more information on bankruptcy and what it involves, call our office today at 817-335-4003 to schedule a free consultation.