Pros & Cons of Filing for Bankruptcy

Pros

• Bankruptcy provides a reprieve from creditors. The fact that bankruptcy provides both temporary and permanent relief from creditors is a significant advantage. An “automatic stay” prevents them from attempting to collect money from you while your bankruptcy is pending, as well as providing temporary protection from foreclosure, eviction, and car repossession. Debt collectors are no longer permitted to collect on a debt that has been discharged through bankruptcy.
• It will protect future wages. Wages earned after filing for bankruptcy are not considered “property of the bankruptcy estate,” which means they cannot be garnished to repay creditors for any discharged debt.
• However, your future earnings may still be vulnerable to undischarged debt, such as back child support or earnings committed in a Chapter 13 payment plan. Moreover, it has the potential to give emotional relief. Juggling creditors is exhausting, and financial stress can have serious consequences for your health and family. Bankruptcy can provide you with breathing room and a fresh start.
• You can keep some of your assets. Bankruptcy may necessitate the sale of some assets to pay off your debts. However, you will not lose everything because bankruptcy laws protect your home, car, clothing, and other valuables up to a specific amount according to your assets.

Cons

• Bankruptcy ruins your credit. Because your credit score indicates how likely you are to repay debt, bankruptcy can do significant damage to your credit. A bankruptcy will remain on your credit report for up to ten years, but you can start rebuilding your credit right away. You can initiate it by applying for a secured credit card. If you declare bankruptcy, your credit is probably not in good standing, so the hit to your credit score may not be huge. If you still have good credit, you may be able to avoid bankruptcy.
• It can be costly. Bankruptcy filing fees range from $312 for Chapter 13 to $337 for Chapter 7. Attorney fees range from $1,300 for a Chapter 7 bankruptcy to $3,000 for a Chapter 13 bankruptcy.
• You may have to forego some luxuries. While bankruptcy protects exempt assets such as your home and clothing, a Chapter 7 filing requires you to sell any assets that do not qualify to pay off your debts. In Chapter 13 bankruptcy, you can keep your possessions, but the value of nonexempt, luxury assets is used to negotiate a repayment plan with your creditors. However, borrowing will be more difficult in the future. Lenders will be hesitant to extend credit to you in the future if you have a bankruptcy on your credit report. You may be unable to obtain a loan until your debt is discharged by the judge. If you filed for Chapter 7, you must wait two to four years after your discharge to apply for a mortgage.

Our Firm Can Help You Determine Which Chapter Of Bankruptcy Is Best For You:

Filing for bankruptcy is quite a stressful process overall. Going through the filing process while trying to stay on top of your finances can quickly become a time-consuming endeavor. However, with our team handling your case, you can only look forward to a fresh start.

• Helpful in determining which filing chapter applies to your situation;
• Gather the documentation required to file your case;
• Manage communications with creditors; and
• Explain your legal options.
• Attend any meetings on your behalf.

Filing for bankruptcy involves a lot of bureaucratic red tape and protocols. However, you don’t have to be concerned. Your Florida Bankruptcy Attorney can handle everything for you.