Filing for bankruptcy can be a frightening prospect. While bankruptcy can be an excellent method to get creditors off your back and hit the reset button on your financial situation, many are deterred from filing due to the negative social stigma and general abundance of false notions regarding the process. While there are certainly many myths surrounding bankruptcy, there are several both positive and negative effects of filing that must be considered.
- Possible loss of property: Possibly the most negative consequence of bankruptcy (and the one that people are most afraid of) is that you may lose some of your property to the bankruptcy trustee. This will largely depend on your exemptions and which chapter you file under. Chapter 7 bankruptcy can help you get out from under your debts without a single payment to your creditors, but it may cost you some of your non-exempt liquid assets. Conversely, if protecting your property is a main concern, Chapter 13 bankruptcy will usually let you keep most of your assets while instead establishing a 3-5 year repayment plan. An attorney can review your situation and help you choose an option that is right for you.
- Credit score: Many people are concerned that filing for bankruptcy will permanently ruin their credit. While filing for bankruptcy will cause your credit score to take a hit in the short run, it is oftentimes the first step towards slowly restoring your credit score to a higher point than before you filed, causing a net positive effect. In many cases, people end up being surprised how quickly they’ll start receiving credit card offers after bankruptcy. Responsible credit card use and consistently making timely, reliable payments is crucial to your ability to rebuild your credit.
- Automatic stay: One of the most positive effects of bankruptcy is that it will invoke an automatic stay which halts all collection actions and prohibits them from doing many different things to collect on your debts, including calling you, suing you, and sending you collection notices.
- Privacy: Despite bankruptcy’s completely legal nature, many people feel ashamed of their filing and fear anyone finding out about their financial struggles. In most cases, the only parties who will know you have filed for bankruptcy are your creditors, your attorney, and anyone else who you choose to tell. While bankruptcy is a matter of public record, the sheer amount of filings that occur make it so only those who are specifically interested in uncovering your past are likely to discover your filing. Unless you live a high-profile life in the public eye, the chances of anyone finding out about your bankruptcy are slim to none.
Filing for bankruptcy is a completely honorable and legal option for financially struggling Americans to start fresh. Many financially distressed benefit greatly from bankruptcy. Get the answers you need for questions about filing bankruptcy.
At the Law Offices of Simon Goldenberg, PLLC, our knowledgeable New York debt relief lawyers have helped many individuals overcome their financial woes and can guide you towards a plan of action that best fits your specific needs. With headquarters in Brooklyn, and satellite offices in Manhattan and Long Island, we are conveniently located to assist debtors residing in and around New York City.
To find out more about what our team of lawyers can do for you, schedule your free case review by calling our office today at (888) 301-0584.