Are There Any Drawbacks to Filing for Personal Bankruptcy?

 Posted on June 28, 2023 in Bankruptcy

The benefits of filing for personal bankruptcy are undeniable. The automatic stay can help you to avoid repossession, foreclosure, and other creditor action for as long as your bankruptcy case remains active. The time that the automatic stay affords you can allow you to renegotiate secured debt to make repayment more manageable. You can also fine-tune your finances over this period of time so that you are primed to meet new goals once your bankruptcy case is complete.

However, there are also some potential drawbacks to filing for personal bankruptcy. Although these challenges are temporary, they are worth considering if you are thinking about filing for bankruptcy but you still have some questions that are holding you back from moving forward just yet. Bankruptcy is an excellent debt relief and debt management opportunity, but you will want to make sure that it is the best option for your unique situation before committing to the process.

Credit, Credit, Credit

The two primary potential drawbacks to filing for bankruptcy both concern credit. First, it is important to understand that filing for bankruptcy will result in a significant drop in your credit score. The financial benefits that bankruptcy affords mean that most filers – who already have middling or low scores – can rebuild their credit scores effectively over time. However, if your score is particularly high, it might be worth asking whether a bankruptcy alternative would better suit your circumstances in an effort to avoid this inevitable, temporary drop.

Second, due to both the nature of the process and the drop in your credit score that will occur after you file, it will be difficult to secure any new financing for some time. For example, you will be able to pursue a new mortgage in time but not in the immediate months after filing for bankruptcy. This is not a problem for most filers but it is important to keep in mind if securing new credit any time soon is important to you.

Consult with a Savvy San Antonio Bankruptcy Lawyer Today for Personalized Guidance

If you are struggling with overwhelming debt, you likely have many questions about how to manage your situation efficiently and effectively. While it is possible that filing for bankruptcy is the best option at your disposal, it is also possible that it is not. By scheduling a risk-free legal consultation at the Law Offices of Chance M. McGhee at no cost, you can better ensure that your debt management and debt relief decisions are truly informed.

To benefit from the knowledge and experience of a compassionate and creative San Antonio, TX bankruptcy lawyer today, give our firm’s offices a call at 210-342-3400 or submit a contact form on the firm’s website and we will get in touch with you shortly. Every individual’s debt-related challenges are unique. We look forward to discussing yours with you.

Source:

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics