When considering bankruptcy, it can be easy to focus either on what you will lose or gain by going through the process, when in reality, the process is much more complicated with pros and cons on both sides of the equation. For example, if you were badly injured in an accident and were unable to get compensation for medical and other associated bills, many victims may find themselves in a situation where bankruptcy is the best option.
The best thing you can do is to educate yourself as much as possible about the bankruptcy process and then consult a Hartford bankruptcy attorney to discuss the intricacies of your situation. To get you started, here are some helpful trade offs to consider about the bankruptcy process that you may not already know.
What You Lose
When entering into bankruptcy, most people expect to lose debt, but some people are not aware of the other things they can lose, such as:
- You lose a good credit score. While some people may assume bankruptcy gives you a clean slate, this is not entirely true. Even though most of your debt is erased, filing for bankruptcy will still affect your credit score for seven to ten years, depending on what type of bankruptcy you file. This can lead to increased prices for loans and insurance.
- You can lose property. Sometimes people falsely assume they will be able to get rid of their debt without having to get rid of property. This is not always the case. Oftentimes the trustee assigned to your case can sell your house, cars, or other expensive assets in order to pay off credit card, medical, personal or other debts you might have.
- You can lose joint accounts. Joint accounts, or accounts you might share with a spouse, a child, or even a parent, can be used to pay off your debt. It can help to discuss with whoever you share an account with prior to filing bankruptcy so they understand the ramifications as well.
There are consequences to filing for bankruptcy, but there are things you gain as well. For instance, you gain:
- The ability to start over. For people who really need it, bankruptcy can provide a sense of freedom and a new beginning. Often clients feel relieved that they can start over, catch up, and stop the accumulation of debt.
- A financial education. Most people do not know this, but you actually have to do credit counseling prior to filing for bankruptcy. This type of counseling gives you skills like budgeting, money management, and consumer credit. This can empower you not to make the same mistakes after the bankruptcy.
- Freedom from creditors. During the bankruptcy proceedings, creditors are not allowed to try to collect from you during this period. Furthermore, during bankruptcy proceedings, creditors often settle for repayments much less than what is actually owed. Despite creditors settling for a lower rate, they are legally not allowed to come back to you at a later date to ask for more money. Those debts have been settled once and for all.
If you find yourself in a situation where bankruptcy is the best option, be sure to contact a top-rated bankruptcy lawyer, like the ones at The Law Offices of Ronald I Chorches to advocate on your behalf.