Much stigma surrounds bankruptcy, making it difficult for some individuals to acknowledge and address their debts properly. To some degree, everyone has some form of debt; however, this debt is likely manageable and not significant. Nonetheless, one should not feel as though bankruptcy should be avoided, as it could be a very beneficial option. Thus, the cons and benefits of this process will be accessed.
The pros of bankruptcy
When it comes the pros and benefits of bankruptcy, there are several to focus on. To begin, it will offer you a break from creditors. Once the process is initiated, there will be an automatic stay. This prevents creditors from making attempts to collect your debts while bankruptcy is pending.
Filing for bankruptcy also protects your future wages. In other words, anything you earn after the filing will not be considered property of the bankruptcy estate. It should be noted that this does not mean your future wages cannot be vulnerable to undischarged debt.
Nonetheless, filing for bankruptcy does provide some level of emotional relief, as it can offer a fresh financial start. Finally, the bankruptcy processes can help you keep certain assets. While the process might require that you sell some of your assets in order to pay off your debts, there are exemption laws that protects assets such as your home, car, clothing and other valuables.
The cons of bankruptcy
While there are benefits and pros to filing for bankruptcy, it is important to consider the flip side of the coin. Thus, the cons should be assessed. To begin, a bankruptcy filing will negatively impact your credit score. In fact, it can do significant damage to your credit card score, taking up to a decade to repair.
Additionally, the costs associated with the process can be expensive due to filing fees and attorney fees. Next, you may have to give up certain assets, as they might be considered luxury items. Finally, the hit your credit score takes after filing for bankruptcy may make it harder to obtain a loan or a mortgage.
Navigating the bankruptcy process can be complex and emotional. Debt can make it challenging to live your life without constantly feeling weighed down by it. As such, it is imperative to fully understand your situation, exploring the debt relief options that are available to you.