What Are the Negative Consequences of Filing for Bankruptcy?
Filing for bankruptcy protection is seen as a declaration of your capacity to repay your creditors. The fact that you filed for bankruptcy and were granted protection will appear on your credit report for up to ten years.
Additional things to consider while considering the disadvantages of bankruptcy include:
- Filing for bankruptcy may have a severe effect on your immediate financial prospects.
- Obtaining credit after bankruptcy may result in higher interest rates.
- Obtaining credit after bankruptcy may need the payment of a security deposit.
Filing for bankruptcy may offer you and your family the chance to start over and establish a new financial reality. It may also have a number of drawbacks that you should be aware of before making a choice.
In addition to your credit problems, some bankruptcy filings may leave you with non-dischargeable debt that must be paid. Property debt, tax debt, school loans, spousal support, child support, and criminal debt are all examples of non-dischargeable debt.
Many of these non-dischargeable debts will be easier to handle in certain bankruptcy chapters, but they will not be dismissed or discharged.
What Is Bankruptcy and What Does It Mean?
Unexpected or long-term sickness, unexpected or long-term unemployment, and a variety of other circumstances beyond your control may put you in debt from which you may never be able to recover. Insurmountable debt may make it difficult to fulfill your everyday requirements, as well as cause worry and stress.
When this occurs, you may file for bankruptcy under one of many chapters, which will enable you to significantly reduce or eliminate your debt. Bankruptcy is a federal procedure that cannot be filed or heard in a state court. You will be able to restart your credit and financial path under federal bankruptcy rules.
In addition to eliminating debt for individuals and companies, bankruptcy offers some protection to creditors who may still be able to collect a part of the amount due via restructured or reorganized debt payments. Your lawyer can assist you in selecting the appropriate bankruptcy chapter and filing for your unique financial circumstances.
When filing for bankruptcy, you have options.
If your financial situation prevents you from repaying all of your debts, bankruptcy may be a feasible alternative for financial recovery. You should think about these alternative choices before filing for bankruptcy to get your finances back on track:
- To achieve a mutually beneficial debt settlement, work directly with your creditors.
- Until you can get back on your feet, ask creditors for payment deferments, extensions, or reductions.
- Consider combining your debts into a single loan with a single payment.
Consolidating debt has a number of hazards. A local lawyer can help you determine if these alternatives will help you get out of your present financial position or whether bankruptcy protection is a better option for you.
Understand the Benefits of Bankruptcy Filing
You may be wondering what the drawbacks of declaring bankruptcy are. However, there are certain benefits to filing for bankruptcy as well. Filing for bankruptcy may be the solution you need when you need a new start to come out from under a mountain of debt.
In addition to a fresh start, federal bankruptcy provides a number of advantages to consumers, business owners, and corporations, including the following:
- Complete discharge of all dischargeable obligations, with no need to repay them in the future.
- The opportunity to keep certain personal belongings and assets, such as your house and car.
- Relief from debt collectors’ continuous pressure and intrusive contact.
- When dismissed debts are deleted from your credit history, your credit score may increase over time.
During the bankruptcy procedure, your earnings cannot be garnished by creditors, and your vehicle cannot be repossessed. Other benefits of bankruptcy that relate to your circumstances may be explained by your lawyer. Bankruptcy may help you start over financially, whether it’s for yourself, your family, or your company.
Learn about the Advantages of Filing for Bankruptcy.
Our company assists individuals and small business owners who wish to file Chapters 7 and 13 bankruptcy proceedings while seeking bankruptcy protection. We can assist you with more complicated debt reorganization files such as Chapter 11 bankruptcy and Chapter 12 bankruptcy for family farms.
Even if you file for bankruptcy, you may be allowed to keep your possessions. Call BankruptcyHQ now at (855) 756-2569 if you are ready to apply for bankruptcy protection and begin removing burdensome debt.
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