When a person is considering when to file bankruptcy, it is a decision that no one should be taking lightly. A person should not be making a decision until he carefully reviews all of the advantages and disadvantages to filing. It is also important that the individual also understands that not only will bankruptcy allow them to either remove or better manage their debts, it also has a positive and negative effect on their financial future.
1. The Advantages of Filing for Bankruptcy
Some of the advantages you should be thinking about when you want to know when to file bankruptcy are:
- You will be able to modify debt that is secure. This includes debt such as mortgages and car loans.
- You will be protecting yourself from governmental agencies and employers discriminating against you. For example, a utility company cannot take legal action against you for a bill that has not been paid.
- The bankruptcy will remove your credit card debt.
- Your creditors cannot take certain property away from you in order to pay them off.
- If you file Chapter 13 bankruptcy, you may be able to avoid paying any interest that is due on a tax bill that has not yet been paid.
2. The Disadvantages of Filing for Bankruptcy
Take some time to think about the cons or disadvantages to filing for bankruptcy before proceeding. Some of the disadvantages are:
- The bankruptcy will remain on your credit report for 10 years, and your filing will be public record.
- Even though there are protections in place to prevent others from discriminating against you, your reputation could likely suffer harm as a result of the filing.
- Any nonexempt property that you own could be subject to liquidation or even sold so that your creditors can be paid off. Vacation homes are typically nonexempt property.
- You may also have to consider your personal feelings regarding bankruptcy.
- The cost of filing for bankruptcy can be expensive.
3. When to File Bankruptcy
There are many different reasons for personal bankruptcies. In the end, deciding when you should be filing bankruptcy depends on your current financial situation. To help you decide if bankruptcy is the option you want to take, you should contact an experienced bankruptcy attorney.