The Advantages & Disadvantages of Bankruptcy
Facing overwhelming debt can be frightening. If you are considering filing for bankruptcy, compare the advantages and disadvantages so you can make an informed decision for your future. At the Law Offices of Gary Brenner, we have been assisting individuals though financial crises for more than 35 years. If you are drowning in a sea of unpaid bills and high credit card balances, our experienced San Mateo Bankruptcy attorney can assist you in finding the effective debt solutions you need!
Contact our office today to schedule a free consultation.
We can discuss any questions you may have about filing for bankruptcy.
Advantages of Filing Bankruptcy
Filing bankruptcy will eliminate some, but not all, debt. In addition to providing a financial fresh start, bankruptcy can protect your property and income, and even halt collections from creditors.
The benefits of declaring bankruptcy can include:
Dismissing unsecured debt:
Unsecured debt is not backed by an asset, such as your home or business. Examples of this kind of debt include credit card debt, medical bills, and utility bills.
Halting creditor harassment and collection:
Filing bankruptcy puts an immediate stop to the letters and phone calls from creditors and collection agencies. Sometimes referred to as an "automatic stay," this court order comes into effect the moment a bankruptcy petition is filed. Creditors who continue to harass you risk contempt of court and other significant charges.
Protection of property and income:
Filing a timely bankruptcy can prevent creditors from attaching liens against your home, car, or another type of property they deem valuable. Additionally, declaring bankruptcy can prevent garnishment of your wages or other sources of income.
Methods to deal with secured creditors:
If a creditor has attached a lien on your property before you filed bankruptcy, federal law provides mechanisms and exemptions to either reduce or eliminate your financial obligations. Bankruptcy can offer you the means to keep property that might have otherwise been lost, such as your home or car.
Some types of debt can endanger certain personal freedoms. For example, unpaid debt as the result of a car accident can subject you to driver's license revocation. Bankruptcy can protect various liberties, such as your ability to legally drive.
Disadvantages of Declaring Bankruptcy
While declaring bankruptcy may deliver certain financial reprieves, it is not without its pitfalls. Individuals who are considering bankruptcy should be fully aware of the ramifications before proceeding.
The drawbacks of declaring bankruptcy can include:
Loss of property: If a lien has been established upon your property before you filed for bankruptcy, it may not qualify for a discharge. The value of the property, the amount of your debt, and how long the lien has been in place, all factor into the whether or not you can retain possession of the property. Our skilled bankruptcy attorney can assess existing liens and advise you on your available options.
Effects on credit reputation: Under the federal Fair Credit Reporting Act, a bankruptcy will be a part of your credit report for 10 years. Some creditors, but not all, view a financial clean slate more favorably than a huge mountain of debt combined with a plummeting credit rating. Others may use it as an automatic disqualification. There is simply no way to accurately predict the impact this may have on your ability to attain loans in the future.
Nondischargeable debts cannot be eliminated: Certain types of debts are considered to be nondischargeable, meaning they will still need to be repaid after a bankruptcy. However, reductions in amounts owed or payments plans may be an option depending on the type and amount of the debt. Nondischargeable debts can include child support and alimony, student loans, and tax debt.
Cost of filing for bankruptcy: Petitions for bankruptcy court fees are usually close to $300. Attorney and other professional fees can also add to the cost. For example, the courts may assign a trustee to oversee the process. These trustees usually charge a commission for their assistance. Additionally , utility companies and other providers may now require security deposits. These costs should be carefully weighed against the costs of continuing to stay in extreme debt.
Not always the best option: While filing for bankruptcy may provide some relief, it cannot supplement your income nor eliminate your basic expenses. If you have previously filed for bankruptcy, you may be prevented from doing so again for a period of time. Furthermore, in some cases, filing for bankruptcy may hasten the seizure of your property instead of protecting it.
Insightful San Mateo Bankruptcy Lawyer Ready to Help
Obtaining skilled, insightful legal counsel is the smartest way to assess whether declaring bankruptcy would be right for you. Our team at the Law Offices of Gary Brenner would love to meet with you to learn the details of your financial crisis and discuss your available debt relief options.
Call our office today to discuss your financial situation.
Our experienced and supportive San Mateo bankruptcy lawyer serves clients in Contra Costa, Alameda, and Santa Clara counties and throughout the San Francisco Bay Area.