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Manage Debt
Bankruptcy: A Last Resort |
When repayment of your
debts is next to impossible, bankruptcy may be the last resort. Bankruptcy is a very
serious financial and emotional issue that you should not take lightly. In addition to
making sure you've exhausted all ways of paying back debt to your creditors, you should
also consult the advice of a legal professional or financial counselor.
What to Do?
You should consider the advantages and drawbacks before proceeding with a bankruptcy
filing:
Advantages:
- Allows you to discharge most consumer debts.
- Offers some legal protection against harassment by creditors.
- Allows you a fresh start.
- Court may not be able to confiscate furniture, retirement accounts, clothes, home, etc.*
- Temporary protection from seizure of property, garnishment of wages, or repossession of
homes or cars.
*Each state has different laws governing bankruptcy. Certain personal property such as
clothing or homes may be exempt in one state but not another. Check with a legal
professional to uncover what the law stipulates in your state.
Drawbacks:
- Bankruptcy will stay on your credit record for 10 years. It may be difficult to obtain
credit in later years.
- Bankruptcy is expensive. Often a $1,000 just for a lawyer, and at a time when you can
afford it the least.
- Not repeatable. You can file bankruptcy only once every 6 years.
- Loss of privacy. Your personal finances now fall under court scrutiny and control.
- Possible loss of major assets.
- Loss of independence. Emotional fallout from stressful and often embarrassing situation.
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