Advantages and Disadvantages of Bankruptcy
Life often brings circumstances beyond our control which force us into a financial corner and no matter how hard you try, it just never gets easier. If you’re unable to pay your bills when they are due and you’ve tried everything possible to get back on your feet, it may be time to consider bankruptcy.
What does Bankruptcy mean?
Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. This means that you have legally declared yourself or your business unable to pay any outstanding debts.
What would be the disadvantages to filing for Bankruptcy?
The biggest disadvantage of bankruptcy is your credit rating. Since bankruptcy will have a negative impact on your credit rating, it will be harder for you to borrow money. Although most people who file for bankruptcy have a bad credit rating anyway, your credit history will basically reset itself to zero once complete. You’ll also need to keep record of all income and expenses while you remain bankrupt.
What are the advantages to filing for Bankruptcy?
Bankruptcy is the least costly way to deal with your debts. It can sometimes be completed in as little as 9 months. Usually the impact on your credit rating can’t get worse than it was prior to the bankruptcy. Bankruptcy protects you from collection action, legal action and wage garnishments. With financial hardship the stress of all debt can have a big impact on your life and with bankruptcy, the stress will be reduced and you will feel immediate financial relief because you know that your debts are being resolved.
Bankruptcy is intended to provide a person with a fresh financial start.