Pros and Cons of Consumer Bankruptcy

Pros and Cons of Consumer Bankruptcy

Many people see bankruptcy as a big, scary bogeyman that will strip away all of their hard work and leave them destitute, penniless, and pathetic. This couldn't be further from the truth. While there are some downsides to bankruptcy and it isn't a pleasant experience, it is usually much better than living in constant, unending, crushing debt. Some of the pros and cons of bankruptcy are explained below.

Pro # 1

The automatic stay makes all of your creditors stop calling you or trying to collect. Violating the automatic stay can have massive consequences for a debt collector. If you're getting calls from debt collectors at all hours, the automatic stay can bring back peace and quiet to your life. 

Pro # 2

You won't lose everything. Every state has exemptions for what you get to keep during a Chapter 7 bankruptcy and so does the federal government. You might be surprised how much you get to keep while getting your creditors off of your back.

Pro # 3

When it's all over, you will generally be debt-free. The burden will be lifted and you can move on with life.

Cons

Your credit will take a hit. There's no doubt about that. But if you're considering bankruptcy, there's a good chance that your credit is already taking a hit. The sooner you file, the sooner you can rebuild. You will be surprised how many companies are willing to extend credit after a bankruptcy, albeit more expensive credit than usual.

You may feel embarassed. You shouldn't, but you may. Realistically though, if you're filing for bankruptcy, something has gone wrong. You shouldn't feel embarassed for taking steps to fix it. Life goes on and you can get back on your feet.

Bankruptcy isn't the end of the world

I hope this is helpful. If anyone reading has questions about filing for bankruptcy, my office is only a phone call away.