Bankruptcy may be more common in the United States than you have come to realize, but this doesn’t mean it is your only option if you find yourself in a bad financial position.
There is no denying the benefits of bankruptcy, such as the ability to wipe out some or all of your debt. It doesn’t matter if you file Chapter 7 or Chapter 13, there are many benefits of doing so.
On the other side of the equation, you have to become familiar with the drawbacks of bankruptcy. These can be compared against the benefits to make a final determination on how to move forward.
Note: if you file for bankruptcy before you know exactly what you are doing, you could end up regretting the decision in the end.
Here are some things you need to keep in mind:
- You could lose property during bankruptcy. If an asset is classified as nonexempt, it could be sold off to pay creditors. Some types of nonexempt property include but are not limited to vacation real estate and family valuables.
- Your credit score will take a hit. Subsequently, you will find it more challenging (and sometimes impossible) to qualify for a loan, such as for a vehicle or home.
- It may go against your personal beliefs. Are you okay with the idea that some or all of your debt will go unpaid? Some people don’t have a problem with this, but others feel bad that creditors are getting the short end of the stick for a mistake they made.
- The cost. This shouldn’t be a major concern, because you are filing bankruptcy as a means of improving your situation. In other words, you are getting something in return for the money you put out. Even then, it is important to know how much this will set you back, as you are already facing many financial challenges.
Don’t decide for or against bankruptcy until you compare the pros and cons. It is easy to focus on the benefits, overlooking the other side of the process. We are here to answer your questions, explain the pros and cons, and help you make a decision you can be happy with.