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What Are the Advantages and Disadvantages of Bankruptcy?


There are both advantages and disadvantages to filing for bankruptcy to consider. Before you file, you may want to speak with your attorney about other options in Columbus, which may include things like payment plans or short sales to help you get out of debt. If you decide to move forward with bankruptcy, then you'll want to understand the possible pitfalls.

What are the disadvantages of filing for bankruptcy?

One major disadvantage is that your tax debts are usually not able to be discharged. If you owe student loans, those may not be discharged, either. Your credit may suffer a hit, making it harder to take out loans or to apply for credit if and when you need it. You are limited to filing for bankruptcy once within a specific time frame, so if you make another financial mistake, you may not be able to file again for some time. You'll lose your credit cards, and you'll likely lose some of your possessions if you decide to file for a Chapter 7 bankruptcy.

Despite these disadvantages, there are some benefits to bankruptcy, too.

What are the advantages of bankruptcy?

First, the harassing and embarrassing phone calls from credits will be stopped nearly immediately. At that point, they must contact your attorney. Next, if you have tax liabilities older than three years, those will be discharged in most cases. You'll be able to rebuild your life sooner with a bankruptcy that clears your debt, and you'll have a fresh start. Losing your credit cards may not be all bad, and since you'll have fewer debts, you may not need to use them.

Source: FindLaw, "Bankruptcy: Advantages and Disadvantages," accessed April 20, 2016