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Advantages and Disadvantages of Filing for Bankruptcy

Bankruptcy occurs when a person is unable to repay their debts to creditors.  This process offers assistance to the borrower by relieving them of some or all of their debts.  Filing for bankruptcy is usually the last option for people who owe money, but is sometimes necessary for people who are unable to pay off their debts.  Although bankruptcy can negatively affect a person’s future finances, it is often the best decision for them, but every situation is different.  If you’re considering filing for bankruptcy, you should be aware of the advantages and disadvantages of this legal process.  (Related topics: New York real estate lawyers, landlord-tenant law NYC, commercial real estate attorney in NYC)


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Advantages

  • The moment you file for bankruptcy, debt collection proceedings will be suspended. This means that you won’t receive any more annoying calls, letters, lawsuits, property repossession, or home mortgage foreclosures.
  • You will be able to discharge many of your debts, meaning they’re no longer your responsibility. Some of the common dischargeable debts are house payments, credit card debts, and personal loans.
  • Since many of your debts will be discharged, that means that you’ll be able to maintain ownership of your most of your property.
  • Although bankruptcy will remain on your credit for 7-10 years, many debtors actually increase their credit score after this process. Once your debts are cancelled, you will be able to have a clean slate and start rebuilding your credit.

 

Disadvantages

  • Many credit card companies will cancel your cards when you file for bankruptcy. You will probably receive many offers for “unsecured” credit cards, which have a high interest rate.
  • For many years after this process, it will be hard to receive a mortgage or loan.
  • Although some of your property will remain in your name, the court may take some of your personal property to help pay off creditors. Every situation is different.
  • It’s possible that potential employers and landlords will question you about your bankruptcy, which can affect your chances at both.

 

Every person will have a different experience while filing for bankruptcy.  If you’re considering doing so, make sure to hire a real estate lawyer in NYC so that they can advise you whether or not this is the best option for your situation.  If it is, the real estate lawyer in NYC will fight to protect your assets during this legal procedure, while also helping you reach your financial goals.