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The Pros and Cons of Filing for Bankruptcy

Declaring bankruptcy is a big choice that can be extremely scary. But you might be surprised to learn that the cons of bankruptcy are often outweighed by the pros. Personal bankruptcy can give you the clean break you need from debt, so you can start over. It’s often the best way to turn the page quickly on debt problems.


When you file for bankruptcy, it initiates an automatic stay. This means that creditors, lenders, and debt collectors cannot take any action against you or contact you. They cannot attempt to get payment or call to harass you once you file. If they do, you can sue them for violating the law and collect damages.

The automatic stay also can delay foreclosure and repossession actions. As long as the automatic stay is in place while you go through the filing process, lenders can’t move to take your home or other property. Bankruptcy also will not leave you without assets. While courts may potentially liquidate assets during Chapter 7, even your home and car may be exempt from liquidation. So, you even with a Chapter 7 filing, you could likely keep more assets that you might expect. An experienced bankruptcy attorney can review your case and tell you what assets you can retain and which ones may be liquidated in a chapter 7 case. The great thing about bankruptcy is that In the end, you will not be burdened by all the debts you need to repay. The ability to wipe out most debts and focus on rebuilding for the future is priceless to many people.


The point of filing for bankruptcy is to help you manage debt that you can’t pay. And, it’s often a last resort for people who are struggling to make ends meet or are overwhelmed by their financial obligations. With that said, in order to become debt free you will have to pay some court costs and your attorney to assist you in the process. Some people will often joke that they are too broke to file for bankruptcy! Luckily, most attorneys offer reasonable payment plans and court filing fees can be split up into installments so that consumers can start their cases sooner rather than later.

Many people are fearful of bankruptcy because the common myth they’ll lose everything they own if they file. While this is unusual, it’s important to fully understand how bankruptcy — and paying debts through bankruptcy — works. In some cases, such as chapter 7 bankruptcy, your personal belongings can be sold through a process called liquidation to help cover some debts. For example, a court trustee could sell of parcels of land or additional homes you own to cover pay your creditors. In many cases, courts sell off smaller items such as expensive clothing, accessories and luxury items while leaving your home or vehicle. Bankruptcy offers exemptions (protections for some property) so that you don’t have to start from square one. Make sure you disclose all of your assets when you meet with your attorney so they can properly advise you on any risks.

It almost goes without saying that bankruptcy will negatively impact your credit history. Many people are familiar with their credit score. Credit scores can often dip by 50 to 100 points based on the amount of debt and your score prior to bankruptcy. For many clients, they have already missed payments and are facing repossession or foreclosure so their credit is already bad. Filing bankruptcy is not going to affect them as much. The great thing is that rebounding for the credit ding is actually pretty quick and most of our clients have “good” creditor in about 24 months after filing.

If you have any questions about Chapter 13 bankruptcy or bankruptcy in general please feel free to go to or contact us at

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