Advantages and Disadvantages of Filing Bankruptcy
Looking for advantages and disadvantages of Filing Bankruptcy?
We have collected some solid points that will help you understand the pros and cons of Filing Bankruptcy in detail.
But first, let’s understand the topic:
What is Filing Bankruptcy?
Filing bankruptcy is when a person or a company tells the court they can’t pay their debts. The court then helps them make a plan to pay back what they can and cancel the rest.
What are the advantages and disadvantages of Filing Bankruptcy
The following are the advantages and disadvantages of Filing Bankruptcy:
| Advantages | Disadvantages |
|---|---|
| Stops creditor harassment | Damages your credit score |
| Eliminates certain debts | Hard to get loans |
| Allows asset protection | Stays on record for years |
| Creates a fresh financial start | Can’t erase all types of debts |
| Halts wage garnishments | May lose property and assets |
Advantages of Filing Bankruptcy
- Stops creditor harassment – Filing bankruptcy puts an end to the constant nagging and pressure from creditors, providing the much-needed peace of mind.
- Eliminates certain debts – It helps in wiping out certain types of debts completely, freeing you from the financial burden.
- Allows asset protection – This process can also offer protection to your assets, preventing them from being seized or sold off.
- Creates a fresh financial start – It acts as a springboard for a new financial beginning, helping you start over without past debts dragging you down.
- Halts wage garnishments – It also puts a stop to wage garnishments, ensuring your full earnings stay in your pocket.
Disadvantages of Filing Bankruptcy
- Damages your credit score – Filing bankruptcy can harm your credit score significantly, making it difficult for you to secure credit in the future.
- Hard to get loans – It also makes it challenging to get loans, as lenders may see you as a high-risk borrower due to your financial history.
- Stays on record for years – The bankruptcy stays on your record for many years, which can negatively impact your future financial endeavors.
- Can’t erase all types of debts – Another downside is that not all types of debts can be erased through bankruptcy; some, like student loans, may remain.
- May lose property and assets – Additionally, you may lose your property and assets, as they might be used to pay off your debts during the bankruptcy process.
That’s it.
Also see:
- Advantages and disadvantages of Filing Taxes Jointly
- Advantages and disadvantages of Fingerprint Door Lock System
- Advantages and disadvantages of Fingerprint Biometrics
You can view other “advantages and disadvantages of…” posts by clicking here.
If you have a related query, feel free to let us know in the comments below.
Also, kindly share the information with your friends who you think might be interested in reading it.
