Facing debt that seems to be impossible to pay off can make you feel hopeless. Financial struggles can impact every part of your life, leading to worries about your future. Fortunately, there are methods of debt relief that can help you pay off your debt and get your life back on track. Bankruptcy, while initially scary, can be a lifesaver when it comes to reducing debt and getting your financial situation in control. However, bankruptcy isn’t always the best choice so it’s important to understand how the process works and who will benefit most from filing.
Bankruptcy benefits
Filing for bankruptcy can significantly reduce or eliminate your debt. If you’re being hounded by creditors, filing for bankruptcy will prevent them from calling you or sending you letters in the mail. While the initial filing process can be stressful, once you complete it, you may feel a sense of relief that you’re taking control of your finances and doing what is needed to stabilize your financial situation.
Bankruptcy may help you realize how important it is to carefully consider your spending habits in the future. Many people take the opportunity to do a complete overall of their budget and make significant changes to how they spend their money. Look at bankruptcy as a fresh start and an opportunity to make healthy changes so that you can have a financially secure future.
The downsides of bankruptcy
You must fully understand what happens when you file for bankruptcy, so you’re prepared for the changes you’ll face. Filing for bankruptcy will hurt your credit score. In most cases, the higher your score is, the more it will be impacted when you file for bankruptcy. Chapter 7 bankruptcy will show up on your credit report for 10 years. Chapter 13 will show up for seven years.
If you file for Chapter 7 bankruptcy, any co-signers on your debt will still be required to repay that debt. This isn’t true with Chapter 13. When you file for bankruptcy, that information is available publicly to anyone who searches for it. With Chapter 7 bankruptcy, you will usually be allowed to keep your home and car if you continue to make monthly payments on them. Chapter 13 bankruptcy doesn’t allow your home to be foreclosed on, but it does require you to regularly make payments according to a court-approved payment plan.
Seek advice
Filing for bankruptcy is a life-changing decision that should not be taken lightly. If you have questions or concerns about the process, you can benefit from speaking to a professional that understands the Pennsylvania bankruptcy process. With more understanding of the pros and cons of bankruptcy, you can make an informed decision based on your specific needs.