The Pros And Cons Of Filing Bankruptcy
When considering whether or not to file bankruptcy, many people only think about getting their debts discharged. Although this is the main reason for filing, there are other benefits that filing a Chapter 7 or Chapter 13 bankruptcy can bring. Unfortunately, there are also some downsides and it is important to know what these are before beginning the process. Below, our Orlando bankruptcy lawyer explains further.
Pro: Discharging Your Debt
Again, people file bankruptcy because they have an overwhelming amount of debt they cannot repay. Through a Chapter 7 bankruptcy, you can discharge most, if not all, of your consumer debt. A Chapter 13 bankruptcy may also discharge some debt, but the majority of it is restructured into a payment plan extending three to five years. Once your debt is discharged, you are no longer responsible for paying it, allowing you to get a fresh financial start.
Con: Not All Debt is Discharged
Filing bankruptcy can help you discharge a good deal of your debt. However, there are certain types of debts that are not dischargeable. Child support, alimony, and tax debt are just a few of these. It is important to speak to an attorney who can advise on the type of debt you are currently carrying, and whether bankruptcy can discharge it.
Pro: The Automatic Stay
As soon as you file bankruptcy, the court will issue an automatic stay. The automatic stay prohibits creditors and debt collectors from contacting you to try and collect on the debt while the bankruptcy proceedings are ongoing. This can bring much needed relief for borrowers who have been the subject of constant and harassing phone calls from debt collectors.
Con: The Hit to Your Credit Score
Unfortunately, there is no way to avoid a drop in your credit score after you file bankruptcy. A bankruptcy on your credit report will result in a drop of 100 to 200 points, and perhaps more in some scenarios. Fortunately, the effect on your credit score is usually short lived as most individuals that file for bankruptcy will often see their score rise to a 650 or 700 within 2 years or less. It is common for individuals to be able to purchase cars and other items on credit with good interest rates within a short time after receiving their discharge.
Pro: Quick Process
Filing bankruptcy, particularly Chapter 7, is a very quick process. Usually, it takes only between 90 and 120 days to complete a case once it is filed. This allows you to enjoy being debt-free faster, and can potentially shield you from any legal action taken recently by creditors. A Chapter 13 bankruptcy is not considered final until all debt is paid through the repayment plan.
Call Our Bankruptcy Lawyer in Orlando for Help with Your Case
At Anderson & Ferrin, our Orlando bankruptcy lawyer can help minimize the drawbacks of filing bankruptcy while helping you realize all the benefits the process brings. If you have an unmanageable amount of debt, call us now at 407-412-7041 or reach out to us online to schedule a free consultation with our seasoned attorney and to learn more about your bankruptcy options.