Filing for Bankruptcy has its Advantages and Disadvantages
Many people who could be eligible for bankruptcy don’t take advantage of their potential benefits. While bankruptcy filings can have a long-lasting impact on one’s finances, many people feel filing is the best option.
Each person’s financial situation will be unique. It can be hard to know when, how, and why you should file bankruptcy. Filing incorrectly can have severe consequences. A qualified bankruptcy attorney can help you determine whether bankruptcy is right for you.
We invite you to contact us BankruptcyHQ offers a complimentary consultation to discuss your particular situation and how bankruptcy might affect your financial situation.
There are many benefits to filing bankruptcy include:
- All creditors are now repaid. Once you file, the court will issue an automatic stay to stop all debt collection activities. The court will suspend collection proceedings until the bankruptcy case is settled or the stay lifted. It’s that simple.
- Collectors may call or write letters to you
- Debts are subject to legal action
- Wage garnishments
- Foreclosure of a home mortgage
- Repossession of property
An attorney can file a contempt motion against a creditor attempting to collect debts from your account. After the court grants an automatic stay, they can be fined or made to pay damages.
- NOTE: These are not eligible for an automatic stay.
- Criminal proceedings
- Government tax audits
- Establishing, modifying or collecting child support or alimony
- Establishment of paternity
- Co-debtors and co-signers
- If you have filed bankruptcy more than once within the past year, you can petition the court to extend the first automatic stay.
- An automatic stay is not effective if you file more times than once in the past year.
These debts can be canceled or discharged. Bankruptcy can be used to eliminate a dischargeable debt. These include personal loans and credit card debt, as well as utility bills and medical bills.
Some exemptions from bankruptcy may allow you to keep your property after bankruptcy.
For example, assets can be “exempted” from bankruptcy. So you won’t have them taken by bankruptcy. These exemptions are crucial in Chapter 7 bankruptcy and Chapter 13 bankruptcy. Some exemptions only cover a dollar amount of assets, while others protect the asset’s entire value. Some exemptions only apply to certain assets, such as a motor car or a wedding band. Others can be applied to all property.
Although many people are hesitant to file bankruptcy due to concerns about their credit standings, bankruptcy will remain on your record for seven to ten years. However, many bankruptcy filers begin to improve their credit scores after filing bankruptcy. This allows you to rebuild credit by getting rid of all your dischargeable debts.
If you file bankruptcy too soon or too late, your financial situation could be worsened.
The possible disadvantages of bankruptcy include:
Credit card loss.
Many credit card companies will cancel your cards once you file. In addition, you will likely be offered multiple “unsecured credit cards” offers after you have filed. These cards are great for rebuilding credit, but they often come with high annual fees and interest rates.
Credit score immediately affected
Chapter 7 bankruptcy stays on a person’s credit report in North Carolina for ten years. Chapter 13 is valid for seven (7) years.
It can be difficult to get a loan or mortgage.
After filing bankruptcy, it can be difficult to get a loan or mortgage for several more years.
Property and real property loss.
Some personal property and real estate may not be eligible for the exemption. You can have certain assets taken away by the bankruptcy court and then sold to your creditors.
Refusal of Tax Refunds.
In some cases, bankruptcy can lead to the denial of tax refunds.
Housing stigmatism and joblessness.
Potential landlords and employers might ask about bankruptcies in the past. This could negatively impact your chances of being hired.
Some types of debt are not able to be discharged by bankruptcy. These include student loans and alimony, child support.
There are many benefits and drawbacks to filing bankruptcy. It all depends on the individual’s financial situation, which can be affected in many ways. Please Call BankruptcyHQ’s experienced bankruptcy lawyers today. Each client is treated individually.
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