If your debt has begun to spiral out of control, you could consider filing for bankruptcy. Opting to pursue Chapter 7 or Chapter 13 bankruptcy will have its disadvantages, but there are some significant advantages to bankruptcy that may make this a preferable course of action for you and your family. Our New London, CT, bankruptcy attorney explains the pros & cons of bankruptcy to help you navigate this difficult decision.
The Advantages & Disadvantages of Bankruptcy, According to Our New London, CT, Bankruptcy Lawyer
CON: Your pride may take a blow.
There’s a certain emotional aspect to declaring bankruptcy, and you may find yourself embarrassed and nervous about what your friends and family will think. Ultimately, you need to decide for yourself which is more harmful to you and your family: the judgement of others, or the potential financial fallout of not being able to pay your bills.
PRO: Your stress & fear can be reduced.
If you are considering bankruptcy, then you are likely experiencing creditor harassment for unpaid bills. Bankruptcy requires creditors to stop contacting you. Many clients tell our New London, CT, bankruptcy lawyer that they experienced considerable relief once those phone calls and letters stopped coming.
CON: You will likely lose your credit cards.
Credit card companies will typically cancel your credit cards when you file bankruptcy, and you may not qualify for a new card until your credit score has a chance to improve down the line. In the meantime, you will have to get used to life without credit cards, which means relying on cash, checks, and online payments directly from your bank. Being without a credit card can make it difficult to do things such as shop online, rent a car, or stay in a hotel, too, since businesses like these often require a credit card.
PRO: You can avoid losing your home.
Depending on the type of bankruptcy you file, you may be able to stop the bank from repossessing your house or car. You can also stop the bank from seizing items such as your clothing or jewelry. Many of your debts can be discharged during a bankruptcy filing, too, which will help you to maintain a reasonable quality of life for your family.
How Will Bankruptcy Affect Your Credit Score? Our New London, CT, Bankruptcy Lawyer Explains
CON: Not all debts will be discharged & your credit score will suffer.
While there are many types of debt that will be wiped away by a bankruptcy filing, there are some types of debt you cannot escape. Our New London, CT, bankruptcy lawyer lists student loans, recent back taxes, child support, alimony, and government agency fines as the types of debt that will remain your responsibility.
In addition, your bankruptcy will remain on your credit report for 7 to 10 years. During that time, you may not be able to secure a home mortgage or other loans, and you may find it difficult to purchase a new car.
PRO: You may have a better chance of improving your credit in the future.
Even though your credit score will suffer for years after you declare bankruptcy, you may find that the bankruptcy can actually improve your credit score in the long run. With a reduction in your overall debt, you can start rebuilding your life – and your credit – without past debt holding you back. That means that your credit score could potentially be much better in ten years than it would have been without your bankruptcy.
Considering Bankruptcy? Call Our Experienced New London, CT, Bankruptcy Lawyer for Advice
The information contained in this article does not constitute legal advice and is only for educational purposes. If you need legal representation for a matter relating to this topic, feel free to request a free phone consultation with Attorney John Strafaci, our experienced bankruptcy lawyer in New London, CT. Call 860.442.8667 or click here to speak with Attorney Strafaci today!