What You Need to Know About the Advantages and Disadvantages of Bankruptcy

Financial struggles plague many Americans, which is why so many people want to learn more about bankruptcy. The problem is many people are confused by complicated the bankruptcy law Strongsville OH courts require consumers to understand. It’s not as simple as making it publicly known to the court you can no longer afford to pay your bills. It’s a long, expensive, difficult process. You must know which form of bankruptcy is right for you, and there is no guarantee you qualify for bankruptcy until you speak with an attorney. 

The Benefits of Filing for Bankruptcy 

The biggest benefit of your bankruptcy is the automatic stay it provides. If creditors are seeking judgments from the local court to collect the debt you owe them, they can no longer sue. This means you cannot lose your car, your home, or deal with debt collectors harassing you at home and work. They are also forbidden from sending letters once your stay is issued. Another benefit is how quickly you can improve your credit score. Discharged debts make it possible for you to see your credit score rise quickly, even though bankruptcy filings are left on your credit report for anywhere from 7 to 10 years. 

The Disadvantages of Filing for Bankruptcy 

Your choice will remain on your credit report for up to a decade, which means it might be difficult to obtain credit, a new car, or even a home loan in the meantime. When you file for bankruptcy, your creditors might automatically cancel your credit card accounts. This includes the ones that are in good standing because you utilize them responsibly. One of the biggest disadvantages if how a bankruptcy filing can affect your ability to get a new job or rent a new place to live. Another major downfall is that your tax refunds could be denied and used to pay creditors rather than go into your bank account each year. This is something you must consider prior to filing. If you have other options, now is the time to take those into consideration. 

Not All Debts Can Be Discharged 

Bankruptcy is commonly believed to be a situation you get to use when you want a fresh start, but not all of your debts will go away. Federal student loan debt, for example, is not a debt you can discharge. Tax leans do not go away. You are not able to stop paying child support and other support orders, either. Keep this in mind when you choose to file for bankruptcy. It might not be worth it to you. 

Your personal financial situation is one you need to speak with an attorney about. You might want the legal advice prior to filing so you know what you can discharge, what you can’t, and how this will affect you in the years to come. Your attorney is familiar with bankruptcy law, which means they can help you understand what you can expect. You must know in advance how this will proceed.

 

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