What Are the Pros/Cons of Choosing Bankruptcy vs. Doing Nothing?
Bankruptcy is a convenience for those struggling financially that can’t risk losing assets they depend on. It offers individuals an option that doesn’t necessarily include losing their home, car, wages, or other necessities as a means of discharging their debt. However, that scenario doesn’t always represent every individual undergoing financial hardship. For some, filing for bankruptcy may be more damaging than simply doing nothing. Let’s break down the specifics of bankruptcy to determine when it may or may not be the most beneficial choice.
Type of Debt
The first thing to look at in order to weigh whether or not Bankruptcy will help your situation, is to determine if the majority, or any, of your debt is even eligible for discharge through bankruptcy. Certain debts, such as Student Loans, Child Support and some other debts cannot be discharged by bankruptcy. However, if relieving even your few eligible debts will help you to catch up on the noneligible debts, bankruptcy may still be a route towards future financial stability. Read more on which debt is non-dischargeable through bankruptcy.
After determining which debt will be eligible for discharge, next it’s important to look at the implications of carrying each outstanding debt. Is the debt secured with any form of collateral in exchange for the loan? Most car, home, boat, or other loans are secured debts that are eligible for repossession if not paid. However, credit card or medical debt is unsecured in that the creditors must win a judgement in order to collect. Could a judgement result in garnishment of wages, property, or other assets? If you don’t have these assets, or an income, or simply don’t mind losing them, the option of “doing nothing” may not be very concerning. If you want to secure your ownership over these items, filing for bankruptcy may help to settle these debts more manageably.
As you can see, bankruptcy may not be the answer for everyone as there are many factors involved in carrying significant debt. The best way to know if bankruptcy is the right choice for you is to discuss your specific situation with an experienced bankruptcy attorney. To schedule an opportunity to speak with our team contact our office at (702) 998-1188, firstname.lastname@example.org, or schedule a consultation online.