The decision to file for bankruptcy is a serious one that should not be made lightly. While it can provide much-needed debt relief, the ramifications of filing for bankruptcy can last for years and impact everything from your credit score to your ability to borrow money. To help you decide whether this is the right option for you, consider contacting a professional CH bankruptcy attorney.
Pro – Immediately Eliminates Debt
One of the main reasons people consider bankruptcy is to eliminate their debts as quickly and effectively as possible. Depending on the type of bankruptcy petition you file, it could take only a few months or up to five years for your debts to be fully discharged. During that time, you are protected by a court-imposed injunction known as the “automatic stay,” which halts all collection efforts by creditors, including lawsuits, wage garnishment and repossession or foreclosure actions.
Pro – Potential to Keep Some Assets
Another reason people seek bankruptcy is to avoid losing valuable assets such as their homes, vehicles and cash. Fortunately, bankruptcy exemptions allow many filers to keep most of their property. The exact amount depends on the state where you live, but for example, in Ohio, most filers can keep up to $161,373 in equity in their homes, $4,450 in value for a car and up to $550 of cash on hand.
Con – Difficulty Obtaining Credit
The most significant drawback of filing for bankruptcy is that it will impact your credit score for several years. This can make it difficult or even impossible to qualify for new loans, and will also result in higher interest rates on existing debts. In addition, some types of debts cannot be discharged in bankruptcy, including student loans, alimony and child support, and recent (3 years or less) taxes.
Lastly, some individuals may struggle to find employment after filing for bankruptcy because employers might see them as high-risk and charge them higher interest rates or require larger down payments. For this reason, it is important to seek financial counseling before making the decision to file for bankruptcy.
Despite the negative impact it has on credit, the benefits of bankruptcy often outweigh the negative effects for most people. However, it is important to remember that there are other options for individuals struggling with debt, such as credit counseling or debt settlement, which can be effective in helping people resolve their financial problems without resorting to bankruptcy.
Cain & Herren, ALC
2141 W Vineyard St, Wailuku,
HI 96793, USA
+1 (808) 242 9350
cainandherren.com
