The Pros and Cons of Bankruptcy
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PROS
The first thing to happen when filing for bankruptcy is an immediate cessation of all actions by your creditors. This will include foreclosure proceedings currently in process under most circumstances. An attorney will have all threatening calls, emails and letters immediately stopped, and will handle all interactions with your creditors and any ensuing negotiations.
Most states, including Texas, allow your home or automobile to be exempt from seizure, thereby ensuring that you will not be left homeless or without means of transportation.
The minute you declare bankruptcy, your life starts over and you can immediately work toward rebuilding your credit rating. It’s important to understand that student loans cannot be resolved in bankruptcy. It can stop your creditors from aggressively pursuing you, and with the help of legal counsel you may be able to negotiate more favorable terms.
CONS
The first thing to happen is the removal of all credit cards from your possession, and some luxury items in your possession may need to be turned over to creditors.
It’s important to understand that when filing for bankruptcy, you will still be held responsible for the payment of taxes owed (current and past) and student loans. A bankruptcy lawyer will help to arrange more favorable repayment schedules for you.
If you have recently filed for bankruptcy, it will become impossible to secure a mortgage, although with time, usually around 5 years, you may be considered again.