The Pros and Cons of Bankruptcy

Bankruptcy is generally considered the last resort in resolving a major financial hardship. The reason for this is that a bankruptcy will have long term effects on your credit worthiness and can also affect other important factors in your life such as employment and self esteem. Certainly there are cases where a bankruptcy is necessary. However in many cases the negative effects of bankruptcy can be avoided by understanding all of the options available in lieu of filing. Below is a list of some of the negative effects of bankruptcy as well as some of its advantages given the right situation.

Pros:

• It stops all collection actions by creditors, including repossessions, and garnishments upon filing.

• Major assets such as your car, house and other essentials may be exempt from bankruptcy in most states.

• Prevents you from being sued for bad debts and stops a foreclosure process.

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--Choose A State-- Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

--How Much Debt-- $1,000 - $4,999 $5,000 - $9,999 $10,000 - $14,999 $15,000 - $19,999 $20,000 - $24,999 $25,000+

Cons:

• A bankruptcy stays on your credit report for 10 years, making it difficult to obtain credit, buy a home or car, or sometimes get a job or apartment.

• A fee must be paid to a bankruptcy attorney, which may be expensive.

• You may lose non-exempt assets through the process, including losing your ability to use the credit cards.

• A recent bankruptcy makes it nearly impossible to get financing for a mortgage.

• A bankruptcy stays on your credit report for 10 years, making it difficult to acquire credit, buy a home or car, get life insurance, or sometimes get a job.

• Not all debts may be "discharged" in a bankruptcy and a monthly payment may still be required to pay off a Bankruptcy.

• Bankruptcy can be embarrassing and carry a negative stigma. (Also your name will be in court records and could possibly appear in the newspaper.

• It may be a long time before you are able to get any type of credit again, including credit cards.

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