The Pros And Cons Of Bankruptcy The Good The Bad And The Downright Ugly
If you are in a very difficult financial position at the moment, then you are right to be considering the pros and cons of bankruptcy. Bankruptcy is very serious, but in the right situation for the right person it can be life changing in a positive way. Or should I say in a way where the positives out number the negatives. Only you will be able to decide, given you own set of unique circumstances whether or not you will benefit from declaring bankruptcy.
For most people declaring bankruptcy is a last resort, for the millions of people every year who face financial ruin, bankruptcy can provide you with much needed legal protection for your situation. And that is what peo0ple who are in financial trouble need, legal, regulated protection. To protect them from the sharks who helped them get there in the first place and who profited from their unfortunate circumstances.
Financial institutions benefit from people not paying their debt, they benefit hugely from lending money to people who do not pay it off in full every month. In fact did you know that credit card companies do not want people who pay their cards in full each month or every few months. Often a credit card company will take back a card from a good payer as there is no money in it for them. They want people to spend on their cards and NOT pay them off.
Any when you have the might of a financial institution chasing you for payment you also need a legally recognised force on your side to step in and stop the bullying. This comes in the form of bankruptcy. Once you have declared bankruptcy then you have the state on your side. The state and its bankruptcy laws will come between you and your creditors. And the good news is that the state and you win.
No-one should be punished for getting themselves into financial trouble through no fault of their own. Through a change of circumstances out of their control. Medical bills and unemployment are the two greatest contributors to bankruptcy globally and these cannot usually be foreseen. Nor can a global financial crisis. Most of the time it is not the result of greed that people find themselves in trouble.
In the good times, everyone was positive about their futures. No-one foresaw what was coming. It is human nature when things are going well to expect them to continue going well. And lets face it if the top financial experts in the world could not accurately forecast the down turn then how could you? You couldn’t so give yourself a break.
However now you need to know, understand and be fully aware of what bankruptcy can offer you. The good the bad and the ugly of declaring yourself bankrupt. The pros and the cons of bankruptcy warts and all.
So here goes.
The Pros Of Bankruptcy:
- Your debts will be wiped out
Your creditors can no longer, contact you. This means that they cannot call you, email you, call to your home. They are not allowed to make any sort of contact with you what so ever. If you do, you have have their ass.
- You will have a clean financial slate (more about this in the cons of bankruptcy below). You will be starting afresh.
- You will have learned lessons and these lessons will probably stay with you for the rest of your life. Only a minute percentage of people go bankrupt more than once, so you can rest assured that you will probably never be in this situation again, it is all in the past and not in the future.
- Most bankrupts have a better and brighter financial future as they are more careful with their money.
- You will have experienced one of life’s most difficult situations, and it wont have killed you but will have made you stronger. (It doesn’t feel like that sometimes but in the longer term take my word, it does).
- You will have far less debt going forward than you colleagues, friends and family because as a bankrupt you will always be very cautions about accruing debt you cannot pay.
So you see from the list of the pros of bankruptcy above, all in all it is not the end of the world by any stretch of the imagination. But it is no good telling you that now if it is staring you in the face. Just know that you will come out the other end and there is a life after bankruptcy.
But now unfortunately onto the cons of bankruptcy so you can assess whether or not this is the right course of action for you.
The Cons Of Bankruptcy
- Bankruptcy will have a long term effect on your life. Depending on your state laws, it can remain on your credit file for many years. You will need to check this out. But at least up to 6 years.
- There is a stigma associated with bankruptcy but this is usually felt by the bankrupt more than others. Obviously it can, in many circumstances be an embarrassment to the person who has declared. It can also be embarrassing for families. However millions of people are struggling world wide with debt and more of us know people who have gone bankrupt than ever before.
- It can be a huge blow to someones pride.
- You will find it hard to get credit after declaring bankruptcy
- You will find it hard to get a loan
- You will find it hard to get a credit card
- You will find it hard to get a mortgage after bankruptcy
HOWEVER all of the above is not impossible. It can be worked on over time. It is all achievable. With a good financial plan in place you can overcome the cons of bankruptcy in time. You will be able to recover from this, and you will not have the stress and hassle of creditors on your back while doing so.
These days many financial organizations have special packages for those who have been declared bankrupt. Well now they have made so many people insolvent, they don’t want to lose out on all that business do they? There are bank accounts and loans on the market and available to people with a not so good financial history.
BUT you must be cautious and wary, (as most people who have gone through the bankruptcy mill usually are). You will often be charged higher rates of interest with these types of accounts or loans. Shop around, see what the best deal is, and as soon as you have built up your credit score even a little, shop around again and get a better deal. Always be on the lookout for a better deal, do not stay with one bank or one company if they do not offer the best that is on the market.
Speak to your bank or loan company first and ask them for a better deal once you have been with them for a few months. If you have found a better deal out there, tell them and show them who has the better offer. In many circumstances they will listen and give you something more competitive. They will not want to lose your business. After all it costs a bank 10 times more to get a new customer than it does to keep one. It is a very competitive market out there, use this in your favor.
It is now up to you to decide whether or not the pros outweigh the cons. For some, bankruptcy can be liberating and give them a fresh clean slate to use as a springboard for their new financial life and future. For others it is not an option. Whoever you are you are strongly urged and advised to get some good professional advice. You can get good free financial advice from a qualified attorney. Make use of this. Do not consider going bankrupt or even setting up payment plans with your creditors without having gotten advice from a qualified professional.
If you have the budget get yourself a bankruptcy attorney. Bankruptcy attorney fees can often be paid to them in stages and something can be sorted out. A good bankruptcy attorney will save you money, hassle and heartache in the longer term. They will also save you from making mistakes which could also cost you dearly. A qualified bankruptcy professional will give you a more accurate view of the pros and cons of bankruptcy which are relevant to you and your own unique personal circumstances.