If you are feeling the pressure of having too much debt, bankruptcy can provide a safe haven. As soon as your Chapter 7, 11 or 13 petiton is filed, the automatic stay goes into effect, and all collection activity must cease. Once your case is completed, the majority (if not all) of your debt will be eliminated.
The primary con to filing a bankruptcy case is the negative effect it can have on the filer’s credit score. In many situations, however, the filer's credit score is already low due to a history of late payments and delinquencies. The credit bureaus search all public records and will note a bankruptcy filing on the filer’s credit report. It can remain there for up to 10 years. But, as time passes, the negative impact of a bankruptcy on a filer’s score decreases. Unfortunately, there is no method that permits a filer to remove a legitimate Chapter 7, 11 or 13 notation from his/her credit report.
The good news is that creditor may view a bankruptcy discharge as a good thing. For one, they know that the filer who receives a discharge has very little debt (if any) left after receiving a discharge. Creditors also know that such a filer will be working hard to pay future debts and improve his/her credit score. Finally, creditors realize that there are time restrictions on when such a filer can file another bankruptcy, which provides them some protection.
Please keep in mind that every bankruptcy matter is different. If you are considering filing for bankruptcy protection, and you would like to schedule a no-cost consultation to discuss your options, please contact our office by completing the form on this website or calling us at (954) 932-5377.