Q: What are the Pros and Cons of Declaring Bankruptcy?
A: At Bartifay Law, we understand that struggling with debt is more than just not paying your bills. Just as each individual is different, so too, are their debt situations. If you find yourself drowning in debt with no clear way through, you may be considering bankruptcy as an option. If this is the case, let’s take a look at when it’s best to file and what type of filing is right for you.
Q: What are the pros?
A: Debt Forgiveness– With a Chapter 7 bankruptcy filing, you’ll have the opportunity to start fresh with a clean slate. For Chapter 13, you’ll need to pay for a period of time before debt is eventually forgiven. Either way, this is the biggest advantage of filing for bankruptcy.
A: No More Collector Calls– In the case of Chapter 7, you will be legally protected from debt collectors that call and solicit repayment.
A: Rebuild Credit– With a bankruptcy filing, you will be able to start building your credit again, having debts forgiven or repayment plans structured.
A: No More Credit Cards– Without access to credit cards you’ll be able to develop healthier spending habits that will help prevent you from making the same mistakes.
Q: What are the cons?
A: Limited Borrowing Opportunities– Because your credit has been reset, it will be a challenge to borrow or get approval for credit without exorbitant percentage rates.
A: Public Record– When you file, it becomes part of the public record, allowing anyone to access your filings.
A: Cost of Filing – Filing isn’t free. If you choose to hire an attorney, that will be another expense.
A: Stress – Studies have shown that individuals struggling with debt or who have chosen to declare bankruptcy tend to find themselves in poorer health because of increased stress which, in turn, leads to poorer health choices.
Q: What are the different types?
A: There are three main types of bankruptcy. Chapter 11, Chapter 13, and Chapter 7.
Q: What is Chapter 11 bankruptcy?
A: Chapter 11 bankruptcy is much less common because it mainly focuses on businesses or individuals with large amounts of debt. In the case of Chapter 11, the process is long and your finances are controlled by a court appointed trustee, and you will be required to repay debt over time.
Q: What is Chapter 7 bankruptcy?
A: Chapter 7 bankruptcy is far more common and what most people are considering when they file for bankruptcy. With Chapter 7, your debts will be forgiven and the process is relatively quick in comparison to the other two types. In the case of Chapter 7, the debtor could be forced to liquidate assets to repay part of their debt. In order to file for Chapter 7 you must qualify.
Q: What is Chapter 13 bankruptcy?
A: This type of filing is also common. Chapter 13 differs from that of Chapter 7 in that the debtor will essentially be placed into a forced repayment plan, usually over a period of 3-5 years. In a Chapter 13 case, you will not be forced to liquidate any property and requires employment or a regular source of income. In most cases, a trustee is appointed to oversee the repayment process.
Q: How can Bartifay Law Offices help?
A: Bankruptcy can be a stressful and complicated process, but it doesn’t have to be. Here at Bartifay Law we specialize in handling Chapter 7 and 13 Bankruptcy. Call or stop by our offices today for a free consultation.