Bankruptcy Pros and Cons
In times of economic instability, many people are unable to meet their basic needs and fall into debt as a result of trying to survive. Rather than drowning in ever-rising debt and uncertainty, there is another option: bankruptcy. Bankruptcy is a debt solution. If you are in debt and considering bankruptcy as an option, here are some pros and cons to keep in mind:
Pros
- Bankruptcy stops all collection action by creditors, including foreclosures, repossessions, and garnishments.
- Bankruptcy may be able to exempt your home, car and other essentials from being seized.
- Bankruptcy allows you to start rebuilding your credit.
- Bankruptcy prevents creditors from pursuing lawsuits against you.
- Bankruptcy prevents liens from being placed on your home.
Cons
- Bankruptcy may cause you to lose your credit cards
- Bankruptcy may cause you to lose nonessential, luxury items (boat, summer house, etc.)
- Bankruptcy stays on your credit report for 10 years
- Bankruptcy can make it difficult to secure a reasonable mortgage loan
- Bankruptcy may not discharge all of your debts (i.e., student loans, child support, alimony)
- Bankruptcy may cause you to only be eligible for subprime credit card offers and subprime loans that charge high interest rates
Once you have talked to bankruptcy attorney and weighed the pros against the cons, it is time to make a decision. Remember, consulting an experienced bankruptcy firm such as the Bankruptcy & Consumer Debt Center or another firm in your area is always a good idea. These skilled professionals can guide you through the bankruptcy process, explain each step, and provide you with the information and support you need to feel comfortable with your decision.