Pros and Cons of Bankruptcy

Emme Hornung

What is bankruptcy and why is it important?

Bankruptcy: financial failure caused by not having the money that you need to pay your debts


Bankruptcy happens when you cannot pay most of your debts, and when you file it, your credit will go down significantly and will not be able to do many financial things you were able to do before (get a loan, open a checking account, etc). It's important to know your options when you begin to drown in debt and what will happen if you choose this path.

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Pros

  • Stops all collection actions like foreclosures, repossessions, and more.
  • Can exempt your home and car, so you won't end up homeless
  • Frees you of most debt

Cons

  • Takes away all of your credit cards
  • Makes it almost impossible to get a mortgage, loans, or even a job.
  • Stays on your credit report for 10 years, so it's not a quick process.

What doesn't it do?

Does not rid you


  • student loans
  • back taxes
  • child support
  • alimony
  • fines owed to government agencies