Law Office of Judith A. Descalso Law Office of Judith A. Descalso

Weighing the pros and cons about filing for bankruptcy

Most of our Escondido readers weigh the pros and cons of any major decision before settling on a final choice. For those who are facing financial challenges, weighing the pros and cons of filing for bankruptcy is very important. Personal bankruptcy is a popular debt solution that can make a major impact on a person's financial status, sometimes with effects lasting for years.

First, there is the most obvious element in the pro column: the vast majority of a person's debts will likely be discharged. Credit card debt, unpaid loans and even rent that may be owed - all of these debts can be discharged through a Chapter 7 bankruptcy filing. If these are the major debt problems that Escondido residents are facing, filing for bankruptcy can free up a person's income by wiping the slate clean on these debts. However, student loan debt or unpaid child support and alimony usually cannot be discharged. The key is to think about the type of debt you owe, not the total amount.

Then, there is the most obvious element of a bankruptcy filing that would be listed in the con column: the impact on a person's credit score. As most of our readers already know, a bankruptcy filing will usually stay on a person's credit report for several years. Lenders will be much more wary of handing out a loan to a person who has previously filed for bankruptcy.

However, that doesn't mean that the black mark stays on a person's financial records forever. And, as long as a person works diligently toward rebuilding credit in the wake of a bankruptcy filing, their credit score will slowly recover.

Source: Investopedia, "What are the financial consequences of filing for bankruptcy?," June 18, 2015

No Comments

Leave a comment
Comment Information