Some Tennesseans, who are in considerable debt, continue to put off looking into bankruptcy because they’re embarrassed of the personal repercussions. While bankruptcy can be a stressful process, there is no reason you should be embarrassed about taking the steps needed to help yourself get out of debt. Being in debt can feel overwhelming, and you may not be aware of how the process works, especially when it comes to what assets you must liquidate and what assets you can keep. Understanding more about bankruptcy can help you decide if it’s right for you.
The pros of bankruptcy
Bankruptcy is a tool that you can use to get out of debt when you have no other option. When you file for bankruptcy, you’ll have to provide detailed financial statements to bankruptcy court, undergo credit counseling, complete the proper forms and attend a creditor’s meeting. While each of these steps can seem daunting, going through these steps can help you better understand your financial situation, so you’re prepared for the future.
Bankruptcy means you’ll no longer have creditors hounding you to pay back debt. It provides you with a second chance to get your finances under control and the knowledge that you need to be more financially responsible. With Chapter 7 bankruptcy, you keep most items considered necessary to live, which generally includes your home and car. With Chapter 13 bankruptcy, the court will arrange a payment plan that should help you pay off your car note and mortgage without losing those assets.
The cons of bankruptcy
The bankruptcy process will negatively impact your credit score. The higher your score before bankruptcy, the lower it will drop. While this might not be an immediate concern, should you wish to borrow money in the future, you may face a much higher interest rate or be completely denied a loan due to your score.
Bankruptcy is a public process, which means your name will be found on a database should people search for it. If you have any debt with a co-signer, that person will still be responsible for the debt if you file for Chapter 7. Filing for Chapter 13 generally absolves your cosigner from the debt.
When to seek advice
Tennesseans in overwhelming debt should be aware of the pros and cons of bankruptcy before filing. If you believe bankruptcy is the only way to get out of debt, it’s time to seek professional advice. While bankruptcy is stressful, getting the process started sooner rather than later can put you on the right path to getting your finances in order.
