Home Law What are the Reasons for Declaring Bankruptcy? – Understanding Pros and Cons

What are the Reasons for Declaring Bankruptcy? – Understanding Pros and Cons

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Getting in financial trouble can be stressful and depressing. You will have to deal with expenses and pay your debts. In many cases, things may go out of hand and you are unable to handle them. In this case, financial experts tell you to consider going for bankruptcy with the help of a bankruptcy lawyer in Katy. It will save you from a number of difficulties and make your life much easier. However, you should go through its pros and cons before making the final decision. 

Merits of bankruptcy

  • Waiving off debts

It should be noted that if you were eligible for chapter 7, your unsecured debts would be waived off. On the other hand, the secured loan will be recovered by the creditor by selling or seizing your asset that comes under chapter 13. This way, you are likely to feel financially freer because your debts will be minimized to a great extent. The state laws explain which asset you can keep or put on sale.

  • No calls from lending companies

As soon as you file the petition under chapter 7 or chapter 13, the lending companies will have to stop calling you. According to bankruptcy regulations, all collection activities much be stopped immediately after you have filed for bankruptcy. In case, the company continues to call you for payment, it can be considered contempt of court and the company will have to pay damages.

  • No effects on your job

Many people believe that they will have to suffer professionally because they have filed for bankruptcy. The good news is there will not be any effect of it on your job. Your employer will never be able to fire you for doing this.

Demerits of bankruptcy

  • A blemished history

One of the most impactful disadvantages of bankruptcy is that it will reflect in your credit history for 10 years. During this time, you will not be able to apply for any type of loan. The report may be shared with all lenders in the financial industry.

  • You will lose your credit cards

After filing the bankruptcy, you will have to surrender all your credit cards and you will no longer be able to use them. 

Once you have made up your mind to opt for bankruptcy, you will have to contact a bankruptcy lawyer and take the right steps to live a stress-free, debt-free and carefree life.