The Pros and Cons of Filing Bankruptcy
When we are faced with financial difficulties that seem to be insurmountable, most people will at one point consider the possibility of filing a bankruptcy, or even any other alternative to relieve themselves of their debt.
It is true that some benefits can be gained, both personally and financially, from filing bankruptcy. However, a person who has filed bankruptcy is necessarily making a decision to go out of their way to create a new, clean slate for themselves. This may sound like a big deal at the time; however, in the long-run it will prove to be far more beneficial than one that would not have been made if the person had chosen not to file bankruptcy.
Some people will do anything in order to avoid filing bankruptcy; this is not something that should be encouraged. If you are considering filing bankruptcy, read this article to make sure you have considered all of your options.
The Pros of Filing Bankruptcy
When you file for bankruptcy, it provides you with an option of starting over financially. You can begin to re-establish your credit and work toward paying off any remaining debt that is not included in the bankruptcy; in most cases this is referred to as a “wish list.” While it can be difficult to find a lending institution that will give you a loan, this is usually short-lived if you filed a bankruptcy that has been discharged.
It can provide an individual or a business with a new lease on life. If you successfully file bankruptcy and start over as responsible adults, you may be able to build stronger relationships with family members and even some creditors. While this is not always the case, there are a number of benefits to filing bankruptcy.
One of the primary reasons that people file bankruptcy is to ensure that their debtors can never seize their assets or property. When an individual or business files for bankruptcy protection, the automatic stay goes into effect and the creditor is prohibits from attempting to collect breath, paycheck, or vehicles.
It can provide an individual or business a new lease on self-holes. All unsecured debt will be eliminated and the dues will be paid by the individual or business. This will give the individual or business a clear wherein they are a head-start on rebuilding their financial future.
It can provide you with a second chance to better your lifestyle. If the credit card collectors have taken over your life and made your life miserable, they will no longer have a reason to harass you. Rather than facing out in the cold, providing a good living situation to the family while re-establishing one’s credit may be worth the stress of bankruptcy.
It can provide you with a guaranteed start, once again. Bankruptcy is a second chance, and a better time than never when it comes to financial independence.
Cons of Filing Bankruptcy
Filing for bankruptcy takes about 3 to 4 months to get your case heard and you are generally required to appear in court at this time also. A person who has been through bankruptcy can have a rough time trying to re-establish themselves when attempting to apply for a home or personal loan.
Avoiding the bankruptcy will not cheer you up. Your credit will be affected for a period of time. Since so many credit opportunities are available today, you may be bombarded by credit offers that are financial traps. A secured loan can be a common place to hang your hats for at least the next couple years.
If you want to know how to avoid bankruptcy you will need the following:
- A budget -Start off with doing a complete assessment of your monthly living expenses versus your income. Make a list of all necessary payments and make sure you account for your basic daily necessities. If you can carve out some leisure time in your budget, you can use these tactics to create a good routine.
- Avoid fees -Various fees can be attached to a person or business’ loan application. Take a close look at all enticements to ensure that you do not approve any payments that are unnecessary. These may include some family members fees, credit report fees, application fees, legal fees and more.
- Check your credit report -This is considered a hard and fast rule as the information in the report can change quickly. If you notice errors or problems, update it pretty fast.
One thing to keep in mind, you can always talk to your creditors and tell them about your financial situation. In most cases, they are knowledgeable and can offer suggestions for your situation. While they are not giving advice, they are very aware of the possible solutions to your financial problems.
Before you consider any otherSupporting paragraph, think long and hard about your reasons for wanting to file bankruptcy. Talk to your creditors and handle all options thoroughly.
The bottom line is, make sure you are still financially stable and are not encumbered by insurmountable debt.