Bankruptcy can be another necessary business or personal planning tool. Sometimes economic circumstances dictate a fresh start. The United States Bankruptcy Code has several means of giving you a fresh start but in dire times, if business debt, or in other circumstances consumer debt is far too overwhelming, you can start over.

Below are a few of the benefits of bankruptcy:

  • Filing for bankruptcy triggers the automatic stay, preventing creditors from taking action to collect their debts, prevents creditors from repossessing property such as cars, including calling you, suing you, or sending you letters. The stay also stops many evictions, foreclosures, wage garnishments and utility shutoffs.
  • You will be able discharge your obligation to repay any of your dischargeable debts.
  • By using the bankruptcy exemptions, many debtors can go through the bankruptcy process without losing any of their property.
  • Although a bankruptcy filing will remain on your record for 7-10 years, because many debts can be discharged in bankruptcy, many debtors actually improve their credit rating after bankruptcy.

There are also considerations that many should consider before filing bankruptcy:

  • If you are unable to exempt all of your personal property or real estate under the bankruptcy exemptions, some of your property may be taken by the bankruptcy court and sold to pay your creditors.
  • Many credit card companies will automatically cancel your credit cards when you file for bankruptcy.
  • A recent bankruptcy filing may hinder your ability to obtain a mortgage or loan.
  • Tax refunds from federal, state or local governments may be denied based on your bankruptcy.
  • If you are looking for a job or housing, some employers or landlords may look unfavorably on a recent bankruptcy filing.
  • You may be precluded from being named a director for limited liability companies.
  • After your bankruptcy, some debts, such as student loans, many types of tax debts, liens, support orders (such as child support and alimony), federal and local taxes or fines may be non-dischargeable.
  • If you file for Chapter 7 bankruptcy, you will need to wait if you want to file again for at least 8 years.

As long time business and personal legal counselors we are versed in the benefits of bankruptcy protection and how it affects other life relationships.