Friday, May 16, 2014

Filing Bankruptcy Advantages and Disadvantages

Filing Bankruptcy Advantages and Disadvantages

The Benefits of Bankruptcy
One of the benefits of both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy is the automatic stay from all collection activities during the bankruptcy process. The automatic stay will stop creditor harassment and prevent creditors from garnishing your wages, filing and foreclosing on liens, and seizing collateral or property such as your home and car.
If you file Chapter 7 Bankruptcy, many of your debts will be discharged or eliminated. Examples of dischargeable debt include medical bills, credit card debt and unsecured loans. Some debts are non-dischargeable, which means they stay with you even after the bankruptcy.  Examples include student loans, recent tax arrears, domestic support obligations, wrongful death or injury judgments, and criminal penalties like fines or restitution orders. 
To qualify for Chapter 7, your income must be below the median for a household of your size in Pennsylvania or New Jersey.  Our attorneys will perform a thorough analysis of your assets.  In most cases, we are able to protect most or all assets.  We will make clear to you what we are able to protect, and what we are not able to protect.  Know your options before you file. 
Chapter 13 bankruptcy reorganizes your debts into a repayment plan of either three or five years. The monthly payments on your loans will be lowered, so you will be able to continue making payments. If you are hoping to keep more of your assets, such as your house, Chapter 13 Bankruptcy is usually a good choice.  Chapter 13 cases can be significantly more complicated than Chapter 7.  The payment plan is for five years, and many things happen in five years.  You may change jobs, lose or gain income, or your family size may change.  That is why you need an attorney who is there for you for the entire time.  Don’t settle for a lawyer who takes the money upfront and doesn’t return your calls after that.

The Disadvantages of Filing for Bankruptcy

Bankruptcy should always be a last resort.  There are instances when bankruptcy may have disadvantages.  If individuals have not defaulted on their debts yet, they may still have a good credit rating.  Filing for bankruptcy may have a significantly negative impact of the creditworthiness of those individuals.  Chapter 7 filings stay on your credit report for up to ten years, and Chapter 13 filings for up to seven years.  After filing for bankruptcy, individuals may have trouble getting credit.  Credit card companies may not issue you a card.  You may not qualify for a car loan or mortgage for the first few years. 
If you have cosigners for any of your loans, upon filing for bankruptcy, the credit worthiness of those cosigners may be affected.  Even though they did not file for bankruptcy, the loans they cosigned that you listed on your petition may appear listed as subject to bankruptcy on their credit report.  That is why filing for bankruptcy should not be a decision made lightly.  You must consult with a qualified bankruptcy attorney who can assess your particular case and advise you of the consequences. 
We also have credit repair specialists on standby who can minimize these negative consequences and help you with your fresh start.  Post-bankruptcy credit management is critical to getting you back on your feet.  If you make the right moves, you can be back to a good credit score in a few years, not a few decades.  To make an appointment with our Trenton, New Jersey, Chapter 13 bankruptcy attorneys, please call one of our offices or contact us online. Your consultation is free.

No comments:

Post a Comment