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The Pros and Cons of Filing a Bankruptcy

Is Bankruptcy Right for You ?

Bankruptcy Fees

Foreclosure

Senior Debt Relief

Pro and Cons

Chapter 7 Bankruptcy

Chapter 13 Bankruptcy

Massachusetts Homestead Act

Declaring bankruptcy can feel too scary even to contemplate.

But bankruptcy is also a powerful tool and can bring considerable relief for those buried by unsustainable levels of debt.

The following is a list of advantages and disadvantages to consider before declaring bankruptcy.

Advantages

• Phone calls from creditors, collection letters, repossessions, and lawsuits will stop as soon as the case is filed.
• Most unsecured debt is eliminated, ending ongoing missed debt payments, defaults and lawsuits that can drag down your credit score.
• Bankruptcy provides you with a “fresh start”, allowing you to meet your financial responsibilities moving forward.
• Bankruptcy improves your debt-to-income ratio, allowing you to rebuild your credit.
• Exemption laws allow most, if not all, of the things you own to be exempted from the scope of the bankruptcy.
• You can retain your home or your vehicle if you remain current with payments.
• Bankruptcy avoids foreclosure by providing you time to pay back mortgage arrears or to sell your home.
• Bankruptcy may eliminate tax debt older than 3 years under certain circumstances.
• Bankruptcy does not eliminate student loan debt, but will prevent lenders from aggressive collection action.
• Judges, attorneys, and trustees are very respectful and have seen and heard far worse bankruptcy stories than yours (trust us).

Disadvantages

• If you have a healthy credit score, filing for bankruptcy will lower it until you rebuild it.
• The fact that you filed a bankruptcy will appear on your credit report for 7 to 10 years from the filing date.
• You will lose your current credit cards.
• Student loan debt is not eliminated in bankruptcy.
• Most tax debt is not dischargeable.
• You have to wait a certain number of years between bankruptcy filings.
• You may have to wait 4 years or take extra steps to get a mortgage.
• You can lose luxury possessions.
• It can initially feel defeating.
• It can feel uncomfortable to explain to a judge, trustee, and attorney how you got into your financial situation.