Pros and Cons of Declaring Personal Bankruptcy
Declaring personal bankruptcy is a very sensitive issue. In fact, it is one decision that is going to decide your future. Sometimes life under heavy debt may feel like a failure. Fortunately, bankruptcy laws have been designed to provide respite to debtors and allow them to start afresh in their life. They are both positive and negative effects of declaring personal bankruptcy. The decision whether you should file Personal Bankruptcy or not should be made only after going through both pros and cons of the matter.
Bankruptcy is generally filed under Chapter 7 and Chapter 13. Though Chapter 7 can discharge a considerable amount of debt but in most cases it will force a liquidation of the entire assets of individuals declaring the bankruptcy. If the declaration is filed under Chapter 13, the debtor is given some time and a considerable portion of the debt is lowered making it easy for him/her to get rid of his debts.
Once the declaration has been accepted by the court, and automatic stays implies which is the first benefit of declaring personal bankruptcy. In any case, creditors cannot make any annoying calls on visit you personally to cause trouble. In case of Chapter 13, terms of loans and other mortgages can be modified and interest rates can also be lowered. Most of the time, a person who has filed personal bankruptcy under Chapter 13 is entitled to get big exemptions.
It is an undeniable fact that bankruptcy also has a lot of negative effects. Firing bankruptcy under Chapter 7 mainly destroy an individual’s credit that he has accumulated in several years. It is difficult for the one who has declared bankruptcy to get any future loans and credits. Home mortgage also becomes difficult for future. A bankruptcy cannot discharge priority debt like alimony, taxes, student loans and child support.
It is possible for secured creditors to repossess any property or political security that you have. It is recommended that you before you file bankruptcy; you can attempt to negotiate with creditors. Anyhow if things are not working out, declaring personal bankruptcy can be considered.