A pro of filing bankruptcy is the automatic stay. The automatic stay is what protects you from your creditors. It stops creditors from calling you, harassing you, and trying to collect from you. It is a powerful tool in dealing with your creditors. It forces your creditors to only talk to your attorney. The automatic stay stops foreclosures, lawsuits, and wage garnishments.
Another pro of chapter 7 bankruptcy is that if you are eligible, you will discharge all of your unsecured debt without having to make any payments to your creditors while keeping your house, car, and retirement accounts. Our team will be able to help guide you through this process and your exemptions.
The biggest advantage of filing bankruptcy is a fresh start in about 5 months. This means it will not take years for you to start to rebuild your credit like would be necessary under some debt negotiation plans.
As I realize with all of my clients that come into the office or talk with me by phone or text, it can be difficult to make the decision to talk with someone about debt. I always tell clients I will give them the answers to any questions they ask, this includes a few potential cons to bankruptcy.
The first is that chapter 7 remains on your credit for 10 years. However, this can be mitigated by starting to rebuild your credit immediately after your bankruptcy is over. Most of our clients tell us they see little to no effects of the bankruptcy in about 18 months after their bankruptcy.
Another con is that you will have to give up all current credit cards and debt accounts. You do not have the option to keep one card or leave an account out of the bankruptcy. All of your outstanding debt obligations will need to be added to your bankruptcy.
However, this is not the end of the world because after your bankruptcy you will be able to immediately reestablish your credit by applying and obtaining credit card accounts, and other loans such as car or personal loans. Your fresh start will enable you to rebuild your credit.
If you have any questions about the topic discussed in this article, or any bankruptcy law matter, please give us a call at Bononi & Company 724-832-2499.