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Costs and benefits of personal bankruptcy

Many people who are struggling financially wonder if filing for personal bankruptcy is a good solution for them. Whether bankruptcy is right for a person will depend on a number of factors that are unique to each person’s situation. Filing bankruptcy can offer several advantages, but it also may have some costs.

Advantages of personal bankruptcy

The main advantage of bankruptcy is that it offers individuals a chance to start over financially. Most people who file for bankruptcy will be able to get most types of debt completely discharged.

Filing bankruptcy also prevents creditor harassment. An automatic stay is immediately imposed upon filing for bankruptcy to give debtors necessary time to review their current financial situation. This forbids creditors from continuing any collection efforts, and therefore stops or delays foreclosures and evictions, utility turn-offs and wage garnishments. Creditors who attempt to collect debts after an automatic stay is imposed face strict consequences. They may potentially be charged with contempt of court or found liable for damages.

A Chapter 7 bankruptcy offers elimination of all unsecured debts. These are debts for which the debtor has not pledged any property as collateral. Secured debts are debts for which a debtor pledged a specific item of property as collateral, such as a mortgage or car loan. Secured debts can usually not be discharged in bankruptcy. Bankruptcy also usually allows people to keep their property.

Although a bankruptcy does not eliminate secured debts on property, liens can often be discharged or reduced if they are greater than the property value. A Chapter 13 bankruptcy may also give people the ability to catch up on delinquent mortgage payments, allowing individuals to retain their property.

Disadvantages of personal bankruptcy

One of the main disadvantages of bankruptcy is its effect on a person’s credit score. A bankruptcy can stay on a person’s credit report for up to ten years, which may makes it temporarily more difficult to make major purchases.

However, bankruptcy is often only one factor creditors consider when deciding whether to grant credit. Today bankruptcy is more common than in previous years, and creditors are frequently willing to disregard a bankruptcy filing from several years ago.

In addition, bankruptcy cannot eliminate all types of debt, and therefore may not be the right solution for everyone. For example, secured debts, student loans and tax debts are often not dischargeable in bankruptcy.

An individual considering filing for bankruptcy can benefit from speaking with an experienced bankruptcy attorney. The attorney can tell you whether bankruptcy is right for your situation, prepare your bankruptcy petition and set you on the path towards achieving your future financial goals.

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$Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405


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$Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G

St. Petersburg, FL 33701
T: (727) 532-3939


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Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320





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At the Tampa Bay law firm, the Law Offices of Robert M. Geller, P.A., we help people with consumer bankruptcy matters in the Tampa Bay-St. Petersburg,  Florida communities such as Clearwater,     St. Petersburg, Tampa, Thonotosassa, Riverview, Lutz, Plant City, Brandon, Carrollwood, Wesley Chapel, St. Petersburg Beach, Lakeland, Mulberry, Dade City, Pinellas Park, Largo, Seminole, Odessa, Oldsmar and Lithia, and counties such as Hillsborough County, Pinellas County, Pasco County, Polk County and Manatee County.