Advantages and Disadvantages of personal bankruptcy
Bankruptcy provides these advantages:
Bankruptcy provides these advantages:
- Protects from collection action, legal action and wage garnishees
- Eliminates a person’s unsecured debts
- Is relatively quick
- Can be inexpensive relative to the other options
On the other hand, bankruptcy has these disadvantages:
- Is very hard on your credit history
(basically resets your credit history to zero when completed) - May require you to surrender some possessions to your trustee
- Requires you to keep detailed records of your income and expenses while you remain bankrupt.
Although bankruptcy adversely affects a person's credit rating, most people going into bankruptcy have such a bad credit rating that nothing will make it worse. In fact, after bankruptcy, a person is a better credit risk because he or she has no debt. Personal bankruptcy is a powerful vehicle for a debtor to get a fresh financial start.
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