Bankruptcy is something that can happen to any organization or any individual without them realizing it soon enough. Bankruptcy is a situation when an individual or organization is not in a condition to repay their debts and dues.
When this happens, one usually goes through a legal procedure that involves taking the help of an attorney and filing for bankruptcy. A court order then follows the process. Some pitfalls have been listed below, which one should avoid during this process.
Adverse Effects on Credit Rating
This is the primary hazard of filing for bankruptcy. You will face the consequences of adhering to your credit rating. By choosing to go this path, you can have problems regarding your credit report for a good ten years.
You will face ample difficulty when applying for a loan in the future. Your access to credits and investments will be affected severely.
Loss of property and assets
One of the most painful pitfalls of filing for bankruptcy is that most of the time, if not all, it leads to the seizure of one’s assets by the authorities. There is a very meager chance that this outgrowth can be avoided.
Not Hiring the right attorney
Bankruptcy, not being a straightforward process, requires you to have a good decision-making skill set. A lawyer can help you sail through this procedure, but the condition is the lawyer you trust should be worthy of your trust. One should take great care while choosing a Toledo bankruptcy attorney.
Going forward with an experienced attorney and one who has an excellent track record can undoubtedly help your case. The paperwork and formalities will be a smooth sail if you pick the right man for the job. Both chapter 13 and chapter 7 bankruptcy are taken care of by these lawyers.
Some debts are not discharged
If you assume that by filing for bankruptcy, all of your outstanding debts will be released, then you are in for a shock. Bankruptcy surely eliminates most debts using a discharge, but not all. The discharge has limitations of its own.
If your debts are associated with divorce settlements, income taxes, government student loans, alimony, past-due child support, drunk driving offenses, and fraud, then you will not be liable for the recovery of these costs. Also, if you have been granted a discharge after filing for bankruptcy, then any subsequent debt incurred will not be considered for discharge. So, it is an incorrect assumption that one will be utterly debt-free after filing for bankruptcy.
High legal costs incurred
To get rid of your debts, you have to spend more money. This may sound ironic, but it is the harsh reality. You can still avoid it if you go with a more efficient attorney who charges reasonably. An average Chapter 7 filing will cost you about one thousand dollars to two thousand dollars for attorney’s fees.
Housing and job stigma
Once you have filed for bankruptcy, many people and organizations become wary of you because of your financial past. You might face hindrances when starting anew, be it applying for a new job or looking for a new shelter.
One should carefully weigh all the pros and cons while filing for bankruptcy and should not make a rushed decision. A reasonable attorney should be picked so that the process is hassle-free.