What Are the Pros and Cons of Filing for Bankruptcy? (Part 2)

 Posted on August 31, 2022 in Bankruptcy

While bankruptcy is an option that can help people who have encountered financial difficulties address debts and regain financial stability, if you are considering bankruptcy, you will need to understand both the pros and cons of this legal process. In our most recent blog, we looked at some of the benefits that bankruptcy can provide. However, we also want to make sure you are aware of the ways you may be negatively affected by taking action to pursue this form of debt relief.

Potential Drawbacks of Filing for Bankruptcy

The bankruptcy process can be complicated, and you will be required to compile a variety of financial information, fill out forms, and appear during court proceedings. Some of the potential drawbacks that you may face if you choose to file for bankruptcy include:

• Potential loss of property - In a Chapter 7 bankruptcy case, some of your assets may be seized and sold in order to repay creditors. 

• Ongoing payments toward a repayment plan - If you pursue a Chapter 13 bankruptcy, this will require you to make regular payments toward a repayment plan for several years. If you miss a payment or otherwise default on the plan, your bankruptcy case may be dismissed, and you may lose certain assets that were being used as collateral.

• Certain debts cannot be discharged - While bankruptcy can eliminate most debts, there are some types of debt that cannot be discharged. These include student loans, alimony and child support payments, court-ordered restitution, and certain taxes. You will still be required to repay these debts even if you complete the bankruptcy process. 

• Credit counseling requirements - Before bankruptcy proceedings can begin, you will be required to complete credit counseling from an agency that has been approved by the U.S. Trustee's Office. A debtor education course must also be completed before your debts can be discharged. The time and expense of these courses will need to be considered as you determine whether bankruptcy is the best option for you.

• Decreased credit score - One of the biggest impacts of bankruptcy is that it will stay on your credit report for a significant period of time. This can make it difficult to get approved for new lines of credit, and you may be required to pay higher interest rates if you are approved.

Contact Our New Braunfels Bankruptcy Lawyer

The issues described above and in our previous blog are just some of the pros and cons that you will need to consider as you decide whether to file for bankruptcy. Discharging debts through bankruptcy is a complex legal process, and you will need experienced guidance in order to ensure that you understand your options and that you take the correct steps to receive relief from your debts. At the Law Offices of Chance M. McGhee, we can review your financial situation and advise you on whether Chapter 7 or Chapter 13 bankruptcy is the best solution for you. We will help you compile the correct financial information, submit the proper forms, and meet all legal requirements during your case, ensuring that you can receive the fresh financial start you deserve. Contact our Kerrville bankruptcy attorney at 210-342-3400 to set up a free consultation and get started down the road to debt relief.

Sources:

https://www.lendingtree.com/bankruptcy/pros-and-cons-of-filing-for-bankruptcy/

https://financebuzz.com/bankruptcy-pros-and-cons