What are the advantages and disadvantages of filing for bankruptcy?

Some Advantages:

  • Stops the harassment of creditors
  • Stops foreclosures, repossessions, and garnishments
  • Wipes out most outstanding debt
  • Consolidation of bills into an affordable monthly payment
  • Makes it possible for a person to rebuild their credit rating

Some Disadvantages:

  • A bankruptcy stays on your credit report for up to ten years.
  • In a Chapter 7 bankruptcy, you may lose assets such bank accounts, stocks, vehicles that are free of a lien, and even your home if you have significant equity.
  • In a Chapter 13 bankruptcy, you must obtain court approval to buy a car or buy, sell, or refinance a home.  As long as the proposed transaction makes sense and does not harm creditors, the court should grant its approval.
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