The content is accurate at the time of publication and is subject to change.
Speaking to a credit counselor or debt / bankruptcy educator would probably be the best way to know all about bankruptcies, but in a nutshell, here are the advantages of filing bankruptcies.
The advantage of filing bankruptcy is that you immediately gain protection from your creditors. Your slate is Ў°wiped cleanЎ± so to speak, and you may be allowed to start afresh. One very alluring feature of filing bankruptcy is that collectors and creditors are given restraining orders, and are prevented from collecting some specific categories of property such as several clothing and house furniture, shares of earned wages, life insurance and motor vehicles. Moreover, the restraining order stops any harassing and annoying phone calls, lawsuits and / or mail from the creditors from coming any longer.
People choose to file bankruptcy because this gives them the chance to fix and reestablish their credit sooner and without any hassles and nuisances. Moreover, although transactions will be more difficult to make having a bankruptcy to your name, they are not impossible to make ЁC just more difficult and complicated.
The disadvantages, however, seem far less appealing. For one, a bankruptcy may stay on an individualЎЇs credit history for seven or ten years, depending on the type of bankruptcy filed. You would also lose property and credit cards, and you would be prevented from signing for a loan or a mortgage for a period of time. There is also the ensuing consequence of having difficulty of making purchases or opening new credit card accounts.
An equally inconvenient consequence of bankruptcy is that it stays on your record for life, even after it is finally wiped off your credit history after ten or so years. Such a detail on your record could impact future business ventures or job applications.
Moreover, not all the debts will be wiped clean. This is one unfortunate disadvantage of filing bankruptcy. But, you may ask, people file for bankruptcy so their debts will be wiped, right? Yes, but not all. There are several debt categories that cannot be wiped clean by bankruptcy, so to speak. This category encompasses and includes: judgments of the DUI, student loans, child support payments, alimony payments and other debts incurred form divorce and income taxes due for less than three years. Also, debts resulting from fraudulent and suspicious activities and transactions will not be covered. Indeed, it may even result to worse consequences such as being sued for criminal fraud.