Is Bankruptcy The Right Option For Me?

By on July 7th, 2015 in Industry Insights
TrueAccord Blog

When you’re overwhelmed by debt and creditors are calling, the allure of a clean slate via bankruptcy is like a sirens’ call. Before you make the leap overboard and decide that bankruptcy is the right option for you, you need to know what you’re getting yourself into, as well as weigh the pros and cons of the process. The first place to start is to obtain credit counseling to comply with a recent amendment to the US Bankruptcy Code, which requires it. Speaking with a certified credit counselor will help you consider all available options and ensure that bankruptcy is your only viable choice. Bankruptcy is harmful to the long term financial health of an individual, so it’s important to be ready for the associated costs, time, paper work, emotional toll and future financial repercussions.

Is bankruptcy the right option for you?

Spend some time considering if filing for bankruptcy is the best option for you and your family. Because of its nature, the judgment will remain on your credit report for between 7 (Chapter 13) to 10 (Chapter 7) years. Also, given that you can only file for bankruptcy once every 8 years, it’s important that you don’t find yourself in a similar position (or worse) without recourse. Here are Pros and Cons of filing a bankruptcy petition:

(Learn about Chapter 7 and Chapter 13 Bankruptcy.)


  • Debts such as credit card debt are discharged (removed).
  • Your home, car and certain property are protected from being liquidated to pay debts.
  • You are protected from discrimination by governmental groups or private employers and can’t be fired.
  • You’ll have more legal tools to challenge disputed debts with creditors.
  • Chapter 13 can prevent foreclosures and repossessions through an automatic stay.
  • For Chapter 13 filers, depending on the income of the debtor and the amount and type of debt, the repayment can be 10% to 100% of the total amount owed.


  • Your nonexempt property (such as recreational vehicles, heirlooms, rental property or vacation home), can be liquidated to pay off creditors.
  • Hiring an attorney, paying court fees, engaging a credit counselor, paying trustee fees — many aspects of the process requires a lot of money. If the inability to carefully create a financial plan put you in this position, this may extend some of your financial-related stress.
  • If your taxes have not been correctly filed in the last 2-3 years, this will be counted as a judgment against you. Tax returns are crucial to determining current and past earnings and asset holdings, as well as satisfy potential priority tax claim. Be warned that if your taxes aren’t in order, you may not be able to file for Chapter 13.
  • The court may dismiss a Chapter 7 case filed by an individual with primarily consumer, rather than business debts.
  • It’ll be part of your credit history for 7-10 years and part of the public record.
  • You could be discriminated against, in spite of the protections provided by legal bankruptcy.
  • Bankruptcy filing is in the public record, so your reputation may be affected.
  • For Chapter 13, the duration of payment lasts between 3-5 years.
  • You cannot file for bankruptcy again for 8 years.
  • Court fees of at least $310 or $320.

There’s hope before bankruptcy

There are other options to get you back on your feet that don’t involve bankruptcy. TrueAccord can help with your debt resolution and get you back on track. After you register, you’ll be able to view your balance and payments, file a dispute online, set up a payment plan for your bill, and pay your bill safely and easily.


If you have questions about Chapter 7 or Chapter 13 bankruptcy, we cover that information here.