Many people think that bankruptcy is the best option for them when facing a seemingly unconquerable financial problem. However, filing for personal bankruptcy comes with a number of disadvantages. It is important to take these disadvantages into consideration and pursue alternative methods of debt relief that may be more beneficial for you specifically.
Bankruptcy can ruin your credit as it remains on your credit report for 10 years. A low credit score with a bankruptcy on it may impair your ability to make necessary financial decisions. Getting a mortgage or even renting an apartment may be incredibly difficult with bankruptcy on your credit report. You can also expect to be unable to get a credit card or loan for quite some time.
You will have to pay the court fees and attorney’s fees. In some cases, filing Chapter 7 can cost thousands of dollars in attorney fees alone.
Loss of Property and Possessions
Bankruptcy can result in you losing all of your non-exempt assets during the process as the court-appointed trustee will be responsible for using such assets to pay off your creditors. If you attempt to hide any assets from the trustee, you can face legal ramifications.
The debtor is not the only one who can be affected by bankruptcy. For example, if you are a sole proprietor of a business, the bankruptcy can damage your business as well. Being that there is nothing that separates you from the business, debts are cumulative which can result in business assets being seized and sold. If you do not have the cash to keep your business afloat, then you could lose it.
Every Debt Will Not be Discharged
Many people believe that every debt that they have will be discharged by bankruptcy. You can get rid of most of your debt with bankruptcy, but there are limitations. Even if you file for bankruptcy, you will not be able to get rid of debts linked to:
- Past-due child support
- Divorce settlements
- Government student loans
- Drunk driving judgments
- Income taxes
Being aware of your relief options is vital when managing multiple streams of debt. Bankruptcy may seem like your only avenue of debt relief, but Heather Benveniste with Benveniste Law Offices can offer a less damaging option for potential financial freedom. Consumer debt from excessive credit card use is a primary source of debt for millions of Americans. With seven years of experience as a collection attorney, Heather knows how to negotiate with creditors on your behalf and can help settle debt issues on terms most favorable to you. Contact us today for a free case evaluation.