Bankruptcy Tips: Should You Avoid It Or Lean In?

Law Blog

Debt is a major problem for people throughout the US. This isn't simply because people are bad with money; there are many factors that can result in the best of us finding ourselves under a mountain of debt such as a sudden illness that makes us unable to work.

When you're in such a debt crisis, one of the options that you can take is to file for bankruptcy. However, this is not an option a lot of people are scrambling to pick. Is it better to avoid filing for bankruptcy or to just go ahead with it?

The Downside of Filing for Bankruptcy

Although filing for bankruptcy can keep your creditors from harassing you or coming after everything you have, it does have a few undesirable effects.

A bankruptcy filing will appear on your credit report and will remain there for 7 years if you filed for chapter 13 bankruptcy or 10 years if you filed for chapter 7 bankruptcy. With this mark on your credit report, your credit rating is going to suffer. This can make it impossible for you to get credit cards, take out a mortgage, or secure any form of financing from many lenders.

The Downside of Not Filing for Bankruptcy

Filing for bankruptcy may not be the absolute savior you need when you're in a debt crisis. However, it can still save you a lot of pain. Delaying filing for bankruptcy can have undesired effects such as:

• Increase in your debt due to the accumulation of interest if you're only able to make the minimum payments
• You could sell off assets to make payments when these assets would have been protected in a bankruptcy
• You could consolidate your debts only to end up with one loan with an interest rate you can't afford
• Stress from persistent calls from creditors and threats of litigation

Is Bankruptcy Right for You?

Just because you have a lot of debt doesn't mean you should file for bankruptcy. A lot of people could find their fortunes changing significantly if they simply hired someone to offer them debt advice. You might be surprised to learn that with a different approach, your current debt could be much easier to handle.

On the other hand, postponing a bankruptcy filing in some cases is simply delaying the inevitable. This means more time for things to get worse. You can save yourself a lot of stress simply by hiring a bankruptcy lawyer like Todaro David M Co LPA.

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18 October 2018