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
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.