Is Bankruptcy Right for You?
Is Bankruptcy Right for You?
If you are drowning in debt and stressed about how you are going to put food on the table, clothes on your back, and a roof over your head, you may be asking yourself, “Is bankruptcy right for me?” While bankruptcy is one of the most practical and effective ways to relieve oneself of overwhelming debt, it is not for everyone who experiences financial hardship. If you are considering bankruptcy, it is important that you understand the pros and cons of filing. The Merrillville bankruptcy lawyers at the Law Office of Kevin M. Schmidt, P.C. can assess your financial situation and help you determine if bankruptcy is the best option for you, or if another debt management program might be better.
Advantages of Filing for Bankruptcy
Bankruptcy comes with several advantages, the biggest of which being its ability to free you from unmanageable debt. That said, there are two types of bankruptcy that you can file as a consumer: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is often referred to as a liquidation bankruptcy. In a Chapter 7 case, your assets will be sold and the money used to repay your creditors. Chapter 13, on the other hand, is referred to as a reorganization bankruptcy. In a Chapter 13, your debts will be prioritized and you will be put on a three- to five-year repayment plan. How much you pay each month will be determined by the amount of disposable income you have. Your bankruptcy trustee will repay your creditors in order of priority, and by the end of the three to five years, you will be free of debt, even those which were never completely paid off. Both Chapter 7 and Chapter 13 come with numerous benefits, the greatest of which include:
- The ability to fight repossession, home foreclosure, and wage garnishment;
- Stopping all contact by creditors and debt collection agencies; and
- The ability to achieve financial freedom.
Once you file for bankruptcy, an automatic stay will be placed on all creditors and debt collectors. The stay prohibits them from pursuing any further debt collection actions against you, including calling you at odd hours and garnishing your wages. Simply filing for bankruptcy also halts foreclosure action, giving homeowners plenty of time to come up with an alternative plan to save their homes.
Disadvantages of Filing for Bankruptcy
Of course, discharging one’s debts without actually paying them off does come at a price. While the pros of filing far outweigh the cons, it is important that you understand the full implications of filing before taking decisive action. Some disadvantages of filing for bankruptcy include:
- It can negatively impact your credit score for anywhere between seven to 10 years;
- It can make it difficult to buy a house, car, or other major asset in the future;
- It can hurt your chances at gainful employment; and
- You may lose assets that are near and dear to you.
Despite these disadvantages, the damages caused by bankruptcy are hardly ever permanent. Individuals who go through bankruptcy are required to take debt management courses in which they learn how to better manage their available funds. Because of this, bankruptcy is usually a one-time deal and an experience that consumers learn from. Those who successfully complete the counseling courses and who can maintain a good financial record can rebound within a few years.
Discuss Your Options With a Merrillville Bankruptcy Lawyer
Bankruptcy is not a solution consumers come to lightly, and it is usually a last resort option. That said, bankruptcy is not the taboo method to debt relief that society has made it out to be. Bankruptcy can help individuals achieve financial freedom and give them the fresh start every honest person deserves. If you are drowning in debt and wondering if bankruptcy is right for you, reach out to the Merrillville bankruptcy attorney at the Law Office of Kevin M. Schmidt, P.C. to discuss your options today.