If the financial problem persists and a person is not capable of paying off the debts, he can declare bankruptcy. It can offer several benefits to them but many people don’t opt for it because it can affect their financial condition for many years to come. However, for many of them, this is the last and the best resort and they file for bankruptcy in Katy. Every person has unique circumstances and their paying capacity also differs. In this case, it is important to contact an attorney who can access the condition and determine whether it is the best option for you.
Advantages of bankruptcy
- Immediate relief from the calls from the creditors- One of the most important advantages of this option is that you will not receive calls from your banks and lenders. It does not mean that you will get relief from the debt but you will not be followed by the collections agency because the procedure will be on hold until your bankruptcy case is pending.
- Dischargeable debts- You will be able to discharge some of the debts after filing for bankruptcy. Mostly, these debts include personal loans, credit card payments, utility, and medical bills.
- Ownership of the property- In many cases, the ownership of the property is maintained. You don’t have to worry about getting your property seized because the court will allow you to be an owner. There might be some exemptions to this and your lawyer will be able to inform you about this.
- Improvement in the credit score- Contrary to popular belief, many people start to improve their credit scores after filing for bankruptcy. Once their debts are discharged, they will be able to rebuild their credit and make regular payments towards the debts.
Disadvantages of bankruptcy
- Losing credit cards- The biggest disadvantage of bankruptcy is that you will lose your credit cards. You might be able to get unsecured credit cards and you can rebuild your credit scores but they have high-interest rates and charge heavy annual fees.
- Difficulty in getting a mortgage loan- After you have filed for bankruptcy, you will face a lot of issues in getting a mortgage loan or any loan for many years to come.
- No tax refunds- You may not be able to get state, federal, and local tax refunds.
You must contact a qualified lawyer to file for bankruptcy.