What Are the Pros and Cons of Filing for Bankruptcy? (Part 1)

 Posted on August 29, 2022 in Bankruptcy

Millions of Americans struggle with debt. In many cases, debts are necessary, and they can ensure that a person will be able to buy a home, vehicle, or other important items. Other debts may come about because of unforeseen financial difficulties, such as credit card balances that may become impossible to repay because a person lost their job after making a large purchase. If you have significant debts, you may be looking at your options, including the possibility of filing for bankruptcy. As you review your finances and consider the path ahead, it is important to understand the potential benefits and drawbacks of pursuing debt relief through bankruptcy.

Benefits of Bankruptcy

While the primary reason to pursue bankruptcy is that it may allow you to eliminate your debts, there are a number of other benefits that you may also be able to realize. These include:

• The automatic stay - When you file a petition for bankruptcy, the court will put an order into effect known as an "automatic stay." This means that creditors are prohibited from taking any collection action against you. This can provide some much-needed breathing room as you work through the bankruptcy process.

• Asset protection - In some cases, bankruptcy may help you protect your assets from creditors. For example, if an auto lender has taken action to repossess your vehicle, filing for bankruptcy may allow you to prevent them from doing so, or you may be able to recover a vehicle that has already been repossessed. Depending on the type of bankruptcy you pursue, you may be able to maintain ownership of some or all of your assets.

• Quick discharge of debts through Chapter 7 - If you pursue a Chapter 7 bankruptcy, this will allow you to eliminate most debts within a few months. While some of your assets may be seized and liquidated during the bankruptcy process, certain assets will be exempt, and you may even be able to complete a "no-asset" bankruptcy in which you will not be required to turn over any property.

• Affordable ongoing payments through Chapter 13 - If you are looking to avoid a foreclosure or the repossession of other property, Chapter 13 bankruptcy will allow you to set up a repayment plan in which you will pay off certain debts over a period of three to five years while also making payments toward secured debts such as your mortgage or auto loans. Your repayment plan will be based on your disposable income, so you can make sure that you will have enough left over to cover your ongoing needs.

Contact Our San Antonio Bankruptcy Lawyer

While there are a number of benefits that may come with bankruptcy, there are some drawbacks as well, and we will be looking at some of these in our next blog. At Law Offices of Chance M. McGhee, we can provide guidance and assistance as you evaluate your options and decide on the best course of action for your situation. To learn more about your options, and to receive dedicated legal help throughout the bankruptcy process, contact a Schertz bankruptcy attorney at 210-342-3400 to schedule a free consultation.

Sources:

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

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