People have to file for bankruptcy and therefore there are pros and cons of bankruptcy that need to be understood before taking the final leap. The decision to file for any chapter of bankruptcy is a decision that many people struggle with daily. Even big businesses struggle with the decision as well. Before filing for bankruptcy, sit down with a credit counselor and decide the best options for you and your family. Keep in mind that filing for chapter 7 and chapter 13 has a mandatory requirement for credit counseling.
Let us look at some of the pros of bankruptcy:
* It will wipe out all your debts and allow one low repayment for five years.
* Creditors usually reduce the debt owed, which lowers your total debt.
* You get a fresh start and can start building a new and positive credit report.
* Depending on the chapter of bankruptcy, you can retain procession of all your assets.
Let us now look at some of the cons of bankruptcy:
* You need to wait at least two years before trying to apply for a loan or credit card.
* You take a chance of losing some of your assets, depending on what chapter of bankruptcy you file.
* You have to pay a lawyer in advance for representing you in the proceeding.
* Your credit history does suffer until you start your credit repair and build up good credit again.
* If you get in debt again, you cannot file for another seven years, thus debt could plague you severely the next time.
If you read the pros and cons of bankruptcy, you will have a better idea about what you can expect during and after the bankruptcy. This is important for many people considering such a big step in their financial future. If you have other alternatives, many people try to work things out a different way.
You can use a credit counselor to arrange a repayment plan without filing for bankruptcy that most people do not understand or have any knowledge of this process. This might be an ideal way for you to relieve your debt and still keep a bankruptcy off your credit report. When you know the pros and cons of bankruptcy, it makes it easier to decide.
Check with a lawyer and he will probably have some other legal pros and cons of bankruptcy you may need to know that sit more in the legal grounds of bankruptcy.
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