{"id":3188,"date":"2021-02-23T16:56:23","date_gmt":"2021-02-23T16:56:23","guid":{"rendered":"https:\/\/hsapclaw.com\/?p=3188"},"modified":"2023-04-28T07:20:33","modified_gmt":"2023-04-28T07:20:33","slug":"filing-for-bankruptcy-what-are-its-advantages-and-disadvantages","status":"publish","type":"post","link":"https:\/\/hsapclaw.com\/filing-for-bankruptcy-what-are-its-advantages-and-disadvantages\/","title":{"rendered":"Filing for Bankruptcy: What Are Its Advantages and Disadvantages?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Struggling with debt can be burdensome and overwhelming. Sometimes declaring bankruptcy is the best solution. However, financial circumstances vary from person-to-person, and the process of filing for bankruptcy can be complex. To help you with your decision in declaring bankruptcy, we have prepared a list of the pros and cons of <a href=\"https:\/\/hsapclaw.com\/bankruptcy-attorneys\/\"><strong>filing for bankruptcy<\/strong><\/a>.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Advantages_of_Filing_for_Bankruptcy\"><\/span><span style=\"font-weight: 400;\">Advantages of Filing for Bankruptcy<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6629baf582cf2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6629baf582cf2\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/hsapclaw.com\/filing-for-bankruptcy-what-are-its-advantages-and-disadvantages\/#Advantages_of_Filing_for_Bankruptcy\" title=\"Advantages of Filing for Bankruptcy\">Advantages of Filing for Bankruptcy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/hsapclaw.com\/filing-for-bankruptcy-what-are-its-advantages-and-disadvantages\/#Disadvantages_of_Filing_for_Bankruptcy\" title=\"Disadvantages of Filing for Bankruptcy\">Disadvantages of Filing for Bankruptcy<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><b>1. Automatic Stay<\/b><span style=\"font-weight: 400;\"> &#8211; in the federal bankruptcy law, an automatic stay is an automatic injunction that halts actions by creditors, collection agencies, government entities, or individuals to collect debts from a debtor who has declared bankruptcy (with certain exceptions).\u00a0 However, it doesn\u2019t cancel debts; debt collection proceedings are only suspended until the bankruptcy case is finished or until the stay gets lifted. Once a bankruptcy petition is filed, the stay begins and prevents any debt collection activity which includes:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Debt collection letters or calls from debt collectors<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lawsuit cases on your debts<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Wage garnishments<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">House or property foreclosures<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Repossession of property<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If a creditor or lender tries to forcibly collect debts from you after your automatic stay is granted by the court, contempt of court action can be filed against them by your <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/federal-bankruptcy-exemption\/\"  rel=\"dofollow\" title=\"bankruptcy lawyer\" data-linkilo-keyword-link=\"linked\">bankruptcy lawyer<\/a>. Meaning, the court can prevent their collection attempts, let them pay a fine, and\/or make them pay damages.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is important to note, however, that an automatic stay can\u2019t stop the following:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Government tax audits<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Criminal charges and proceedings<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Establishing paternity<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Establishment, modification, or collection of child support and\/or alimony<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Debt collection from your co-signers or co-debtors (in a <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/chapter-7-bankruptcy\/\"  rel=\"dofollow\" title=\"chapter 7 bankruptcy\" data-linkilo-keyword-link=\"linked\">chapter 7 bankruptcy<\/a>)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Also, if you\u2019ve once filed for bankruptcy within the past year, you can file a petition in court to extend the automatic stay. Note, however, that if you file for bankruptcy more than once in a year, the <a href=\"\/automatic-stay-bankruptcy\/\">automatic stay lasts only 30 days<\/a> or in some cases doesn&#8217;t kick in at all, unless an order is issued from the court.<\/span><\/p>\n<p><b><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-3191 size-medium\" src=\"https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-300x300.jpg\" alt=\"Filing for Bankruptcy\" width=\"300\" height=\"300\" srcset=\"https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-66x66.jpg 66w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-150x150.jpg 150w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-200x200.jpg 200w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-300x300.jpg 300w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-400x400.jpg 400w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy-600x600.jpg 600w, https:\/\/hsapclaw.com\/wp-content\/uploads\/2021\/04\/Filing-for-Bankruptcy.jpg 626w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>2. Dischargeable Debts<\/b><span style=\"font-weight: 400;\"> &#8211; dischargeable debts are financial obligations that can be wiped out by a bankruptcy discharge. Once you receive your discharge, creditors can\u2019t go after you to collect these debts and you\u2019re no longer obliged to pay them. These include:<\/span><\/p>\n<ul>\n<li>Credit card balances<\/li>\n<li>Medical bills<\/li>\n<li>Personal loans made by family, friends, etc.<\/li>\n<li>Past-due utility bills<\/li>\n<\/ul>\n<p><b>3. Exempt properties<\/b><span style=\"font-weight: 400;\"> &#8211; bankruptcy exemption laws allow you to keep ownership of a portion of your properties after bankruptcy. When a property is exempted, it can no longer be seized by a creditor.\u00a0<\/span><\/p>\n<p><b>4. Credit score<\/b><span style=\"font-weight: 400;\"> &#8211; it is true that once you filed for bankruptcy, it could remain on your record for 7-10 years. However, <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/bankruptcy-attorneys\/rebuilding-credit-after-bankruptcy\/\"  rel=\"dofollow\" title=\"rebuilding credit\" data-linkilo-keyword-link=\"linked\">rebuilding credit<\/a> isn\u2019t impossible. Once the bankruptcy process is over, you can start improving your credit scores. Once your dischargeable debts are canceled, you can have a fresh start and rebuild your credit.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Disadvantages_of_Filing_for_Bankruptcy\"><\/span><span style=\"font-weight: 400;\">Disadvantages of Filing for Bankruptcy<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Credit card confiscation<\/b><span style=\"font-weight: 400;\"> &#8211; when you <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/how-often-file-bankruptcy\/\"  rel=\"dofollow\" title=\"file bankruptcy\" data-linkilo-keyword-link=\"linked\">file bankruptcy<\/a>, your credit cards automatically get canceled by credit card companies. You might get a lot of offers for \u201cunsecured\u201d credit cards during bankruptcy, and these might help rebuild your credit. However, these usually charge high-interest rates and annual payment fees.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Immediate negative impact on credit score<\/b><span style=\"font-weight: 400;\"> &#8211; there are different types of bankruptcies and different bankruptcy laws apply to these. For a <a href=\"https:\/\/hsapclaw.com\/chapter-7-bankruptcy\/\"><strong>Chapter 7 bankruptcy<\/strong><\/a>, it could stay on your credit report for up to 10 years and up to 7 years for <a href=\"https:\/\/hsapclaw.com\/chapter-13-bankruptcy\/\"><strong>Chapter 13<\/strong><\/a>.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Hardships in applying for a mortgage or a loan<\/b><span style=\"font-weight: 400;\"> &#8211; bankruptcy can make it hard for you to get a new loan or mortgage for years.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Loss of real estate assets and properties<\/b><span style=\"font-weight: 400;\"> &#8211; sometimes personal properties and real estate won\u2019t qualify as an exemption. Meaning, your assets could be seized by the bankruptcy court to pay creditors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tax refunds denial<\/b><span style=\"font-weight: 400;\"> &#8211; once you declare bankruptcy, you could be denied local, state, and federal tax refunds.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Non-dischargeable debts<\/b><span style=\"font-weight: 400;\"> &#8211; some debts can\u2019t be discharged in bankruptcy; these debts could include child support and alimony, <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/student-loan-debt\/\"  rel=\"dofollow\" title=\"student loan\" data-linkilo-keyword-link=\"linked\">student loan<\/a> debts, and criminal fines and restitution.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">There are a lot of things to consider before filing for bankruptcy, and these advantages and disadvantages can vary based on your financial circumstances and the many factors that could affect these.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you are considering filing for bankruptcy, we are here to help. Call one of our <a href=\"https:\/\/hsapclaw.com\/\"><strong>experienced bankruptcy lawyers<\/strong><\/a> at <strong>Hammerschmidt, Stickradt &amp; Associates P.C.<\/strong> today at 248-600-4536 for a free consultation.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Struggling with debt can be burdensome and overwhelming. Sometimes declaring bankruptcy is the best solution. However, financial circumstances vary from person-to-person, and the process of [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":3192,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts\/3188"}],"collection":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/comments?post=3188"}],"version-history":[{"count":8,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts\/3188\/revisions"}],"predecessor-version":[{"id":4211,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/posts\/3188\/revisions\/4211"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/media\/3192"}],"wp:attachment":[{"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/media?parent=3188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/categories?post=3188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hsapclaw.com\/wp-json\/wp\/v2\/tags?post=3188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}