Pros and Cons of Declaring Bankruptcy

Without a doubt, declaring bankruptcy is something that should not be done without careful consideration of all the positive and negative aspects. In times past, going through a bankruptcy was a fairly traumatic experience for all the family members involved. It carried with it a certain stigma that many people wanted to avoid at all costs.

However, times have changed, and bankruptcy is no longer something that should cause a person to hang his head in shame. The economic situation and job loss are a few of the factors that often contribute to a person’s decision to declare bankruptcy. When a person is weighing whether or not to file for bankruptcy, it is a good idea to look at both the pros and the cons before making the final decision.

Pros of Declaring Bankruptcy

Filing bankruptcy stops the actions of all creditors against you. It stops foreclosure actions, garnishments, and repossessions. Your attorney, if you have one, will deal with all the creditors once you file for bankruptcy.

You can start rebuilding your financial life and credit again the sooner you declare bankruptcy.

Because of the rules in most states, you will probably be allowed to keep your home and automobile. That will provide a roof over your head and the means to get back and forth to a job.

Cons of Declaring Bankruptcy

You will not have any credit cards. But in many cases, credit cards were a major accessory that helped a person get deeply in debt in the first place.

Bankruptcy will appear on your credit report for 10 years. That will make it very difficult, if not impossible, to get credit or buy a home during that period. But a really bad credit score resulting from past due bills can cause the same dilemma.

To some people, declaring bankruptcy seems like an open admission of failure or defeat. But the bankruptcy system was initiated as a last resort for people who needed some way to get out from under an overwhelming burden of debt.

A Fresh Start

It should be noted that bankruptcy will allow an individual to start with a fresh slate after the huge mountain of debt is lifted. With a new outlook and a new opportunity to rebuild, many people find that the pros of declaring bankruptcy far outweigh the cons.

Bio:
Peter Wednt is a writer and researcher with a background in law and clean energy.  For anyone looking for green energy project financing, Wednt recommends The Butler Firm, which primarily serves clients in the clean energy market.