If you are drowning in debt, you may be considering bankruptcy as a legal option to get rid of it. Contrary to popular belief, filing for bankruptcy won’t force you to sell all your possessions to pay off your debts. Instead, the process will allow you to eliminate most of your debt so you can get a fresh financial start.
However, that doesn’t mean that bankruptcy is entirely positive. There are some disadvantages to consider before you file, which can affect everything from some of your non-essential assets to your credit report.
Now, if you have questions about the bankruptcy process or want to know which chapter best fits your situation, you should consult with a Huntington Beach bankruptcy attorney who has the experience and expertise to properly guide you, and KT Bankruptcy Lawyer might be your best option.
Tang & Associates is a law firm that has dedicated itself to helping hundreds of Californians get out of debt through bankruptcy. Contact them for a free consultation if you want to know how to start your journey towards a fresh financial start.
If you are still not sure if bankruptcy is right for you, below you will find the pros and cons of filing for bankruptcy so you can make the right decision depending on your case
Advantages Of Bankruptcy
Stop Creditor On Their Tracks
Once you file for bankruptcy, you will be protected by an automatic stay enforced by the court. That means that your creditors will have to immediately cease all efforts to collect the debt, which includes visits and phone calls harassing you, wage garnishments, and even lawsuits.
Stop Eviction And Foreclosures
If you are being evicted, or if the bank is about to foreclose on your home, bankruptcy can also help you stop both processes temporarily. Depending on the chapter you file, you may be able to use it to buy more time to pay your rent or mortgage.
Get Rid Of Most Of Your Debt
After you are finished with the bankruptcy process, the court will issue an order that will eliminate most of your unsecured debt. These debts typically include medical bills, credit card debt, personal loans, dishonored checks, and civil court judgments. Once you get rid of your debts, you can start rebuilding your finances from scratch.
You’ll Probably Keep Most Of Your Assets
As incredible as it may sound, 95% of people who file for Chapter 7 bankruptcy keep all of their assets after the process is complete. That’s because by filing bankruptcy, you have the opportunity to exempt essential assets from the process, such as your home, car, clothing, household items, etc. The exemptions will likely include all of your assets, and if that happens your case will be classified as a “no assets case”.
Disadvantages Of Bankruptcy
Loss Of Non-Essential Assets
Even if it happens very rarely, it doesn’t mean it’s impossible. In some cases, you may have to sell assets listed as “non-essential” during the bankruptcy process. These usually include items such as jewelry, valuable artwork, expensive clothing, valuable collections (such as stamps or coins), property other than your primary home (like beach houses), or expensive vehicles.
Impact On Credit
Once you file for bankruptcy, you will probably lose all your credit cards. Furthermore, bankruptcy will remain on your credit report for 7 to 10 years. However, you will be able to start rebuilding your credit right after you finish your bankruptcy.
Some Debts Will Stay
Bankruptcy has the power to eliminate most, but not all, of your debts. There are some debts, especially those known as “secured debts,” that will remain with you even after bankruptcy. These include child support, some taxes, and student loans.
It Can Be Complicated
The bankruptcy process can be complicated for those who are unfamiliar with it. Therefore, filing for bankruptcy on your own could have disastrous results. You could lose time, money, and even some of your most precious assets by making a mistake.
That’s why you should work with an experienced Huntington Beach bankruptcy attorney who can assist you every step of the way, should you decide that bankruptcy is right for you.
The team at KT Bankruptcy Lawyer is always available to answer all of your questions and help you on your way to a fresh financial start. Contact them now for a free consultation.
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