Although it tends to have a negative connotation, did you know that there are actually benefits to filing for bankruptcy? Of course, this varies from case to case, but we believe it’s important that you understand bankruptcy isn’t always something to run away from. Below are some pros and cons to filing for bankruptcy, so you can better make a decision as to whether you should file or not.
Pros to Bankruptcy:
- After filing for Chapter 7 bankruptcy, the process of getting out of debt only takes anywhere from 3 months to half a year. Even though there will be a mark on your record for awhile, you’ll be relatively debt free in a short period of time. The trade-off may be worth it for you.
- In most situations, many of the things you already own will be exempt from bankruptcy.
- If you’d like to rebuild your credit, applying for bankruptcy can make it a reality sooner. Although interest will be high, you may be able to open a new credit line within 1-3 years after filing for bankruptcy.
- You don’t need a specific amount of debt to file for Chapter 7 bankruptcy.
Cons to Bankruptcy:
- The effects of filing for bankruptcy could remain on your credit report for up to a decade. We don’t have to tell you that this is a long time to deal with the implications. Be sure that filing for bankruptcy is absolutely necessary and the right thing to do before going through with it.
- If you file for Chapter 7 or Chapter 13 bankruptcy and it is completed, you cannot file for Chapter 7 for another 6 years. If something else puts you in a financial crisis during that time, you will not be able to rely on Chapter 7 as a financial solution.
- All of your credit cards will be lost.
- You will have to tell people (a judge, lawyers, jurors) how you ended up in your financial situation. This may be a very uncomfortable process for some, but in most cases, it’s a small price to pay for a system that ultimately helps.