Americans all over the country continue to feel the adverse affects of the economic recession, which has caused hundreds of thousands of our friends and neighbors here in Georgia alone to take on multiple jobs, downsize their homes, or take out loans in order to make ends meet for their families. Due to these financial issues, folks from all over Georgia have contacted our office to discuss the prospect of filing for bankruptcy and how a successful bankruptcy case may help them alleviate their families’ debts and get their household back on track.
In this spirit of the upcoming Halloween celebration, our office is please to present the following pros and cons – or Tricks and Treats – of filing for bankruptcy. If you still have questions, call our office to speak to an experienced bankruptcy attorney today – we look forward to speaking with you!
Bankruptcy Pros
Let’s start with the treats first. The most obvious advantages of filing for bankruptcy is that, if you file a Chapter 7 case, at the conclusion of your case all of your eligible debts will be wiped away (i.e. “discharged”) and you and your family may move forward with a clean financial slate. The possibility of having a new start is one of the most compelling reasons why Georgians decide to file for bankruptcy.
Another advantage of filing for bankruptcy is that, in some cases, doing so can actually improve your credit score. This may seem counter-intuitive at first but it does make sense. An individual or family is only allowed to file bankruptcy once in a certain amount of years, and so once you file bankruptcy the credit companies know that you will be responsible for any future debts that you incur – and this can improve your credit score.
One more advantage of filing for bankruptcy is the automatic stay. The automatic stay is a legal mechanism that kicks in as soon as the bankruptcy case is filed with the court. The very second this happens all creditors must stop all of their collections efforts against you while the case is being processed by the bankruptcy trustee. This means that if a particular creditor is calling you multiple times, sending you letters, or even initiating court proceedings against you, these efforts must come to an immediate and complete stop as soon as the automatic stay is triggered.
Bankruptcy Cons
Now let’s move on to the cons of filing for bankruptcy. First, many people struggle with the idea of or the process of filing for bankruptcy because of emotions of failure or disappointment. We have had many clients come to our office who, truth be told, should have come to our office months ago but they were embarrassed about their debts and did not want to file for bankruptcy. However, for the reasons outlined above and for others that we can discuss with you, filing for bankruptcy is sometimes the very best option for many people.
Another disadvantage of filing for bankruptcy is that you might be required to sell any assets you may have in order to satisfy as many of your debts as possible. The bankruptcy trustee is empowered to sell your assets and use the proceeds to pay off your creditors. So if you own a vacation home in Cape Cod or have an antique car, you may be required to sell those items and put the proceeds to paying down your debts before your case will be approved. Many of these assets can be protected, and you need to speak with a bankruptcy attorney to discuss your options.
Filing for bankruptcy also costs money, a fact which surprises many people and for good reason. But the bankruptcy court collects a mandatory filing fee to process a case and attorneys also collect legal fees to help a person with their case.
Contact our office at 404-913-1529 to speak to an experience bankruptcy attorney about your case and to schedule your first meeting. We look forward to speaking with you!