The Pros and Cons of Personal Bankruptcy

Pro: Bankruptcy can often be used to eliminate or significantly reduce unsecured debt.

Con:  Not all debt can be removed during bankruptcy, student loan debt, some taxes and child support obligations generally may not be discharged.

Pro:  An automatic stay results when an individual files for bankruptcy.  This is a bankruptcy law protection that prevents creditors from privately collecting on their debts.

Con:  A filer may be ineligible to obtain credit cards during the process.

Pro:  Mortgage arrears and IRS debts can be paid over a period up to 5 years to make retaining your real estate possible even when behind on the mortgage.

Pro:  The law allows debtors to protect basic assets so often a bankruptcy is filed and no assets are lost.

Con:  If there are assets with equity beyond the exemptions assets will be sold to repay debt obligations unless a Chapter 13 is filed to pay creditors the value of the nonexempt assets over time..

Pro:  Filing for bankruptcy is a sign to a person's creditors that he/she understands there is a problem.

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