Bankruptcy filings may help people receive fresh financial starts by discharging or restructuring large amounts of debt. However, they also come with some costs and tradeoffs. Here is a rundown of the benefits of filing for bankruptcy and the important things to consider when going through the bankruptcy process in Ohio.
Bankruptcy pros
A major benefit of a bankruptcy petition is that it can protect the filer from creditors seeking payments. Some debts might be fully discharged, while others may be significantly reduced. A bankruptcy filing may even stop a person’s home from being foreclosed upon or his or her car from being repossessed. Another advantage of a bankruptcy filing is that it comes with an automatic stay, preventing creditors from taking legal action against the party filing for bankruptcy.
Bankruptcy tradeoffs
Filing for bankruptcy may affect a person’s life long term. For instance, it may cause a person’s credit score to drop significantly, at least in the short run. Bankruptcies also stay on people’s credit reports for between seven and 10 years. Initially, this may make it harder to become eligible for new car or home loans, and those who qualify for loans might be charged higher interest rates. A higher interest rate increases a loan’s total cost.
How a bankruptcy attorney can help
Although a bankruptcy filing may make obtaining new loans more challenging in the years ahead, it may be the best option for someone struggling to stay on top of his or her debt. A bankruptcy attorney in Ohio can advise a person on whether to pursue bankruptcy and how the filing may affect his or her debt situation. The attorney will ensure that his or her client’s best interests and rights are protected during each step of the process.