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Filing bankruptcy: Pros and cons

Guest Contributor Christopher C. Carr , Esq., MBA explains the types of bankruptcy and weighs the pros and cons of filing bankruptcy.

In these troubled economic times many people are having difficulties paying their bills and may be wondering whether a bankruptcy will help them. To examine the various strategies available to avoid bankruptcy, we must first understand what bankruptcy is and what it can and cannot do. The United States Bankruptcy Code offers several types of debt relief. The three major types of bankruptcies are:

  • A Chapter 7 Bankruptcy: If you’re seeking to eliminate unsecured debt like credit card and medical bills, filing Chapter 7 Bankruptcy may be a good debt-relief option for you. If you do not own a home and meet the income guidelines, a Chapter 7 Bankruptcy may be the appropriate option. However, certain higher income debtors who do not meet the new Means Test are required to file a Chapter 13 Bankruptcy.
  • A Chapter 11 Bankruptcy is primarily to help in debt businesses.
  • A Chapter 13 “debtor in possession” Bankruptcy: If you’re facing mortgage foreclosure or looking for a structured debt repayment plan for secured debt, Chapter 13 Bankruptcy may be the right choice for you. It can sometimes be the only stopgap measure available to keep your home from slipping into foreclosure and eventual sheriff’s sale while other relief is obtained.

Other advantages to Bankruptcy: The overall goal of every bankruptcy case is to give the debtor a “fresh start.” The “automatic stay” in bankruptcy will apply once your case is filed. This generally halts all collection activities, foreclosures, repossessions, Sherriff’s sales, etc. while in effect.

Disadvantages to Bankruptcy: Many people wish to avoid bankruptcy because of the social stigma perceived to be associated with “going bankrupt” even though it is perfectly legal. More importantly a bankruptcy filing remains on your credit for 10 years and may interfere with efforts to obtain credit, purchase or refinance a home, or even obtain employment. Homeowners, who have racked up large arrears in their mortgage payments which have to be repaid in full over time, may find the payments too high to afford causing the bankruptcy ultimately to be discharged. Bankruptcies can only be filed once typically every 8 years, though the time-frames vary with the type of bankruptcy selected. For these reasons, Bankruptcy should be considered a last resort.

The key point is that each debtor’s situation is unique and deserves special consideration. Further, because the process is hardly ever as smooth as it is supposed to be because of the complexities and pitfalls involved, it is advisable to consult a licensed attorney who has experience in bankruptcies and/or in negotiating modifications to guide you through the process and help you properly complete the paperwork.

About the Author

Christopher C. Carr , Esq., MBA (Finance) is a suburban Philadelphia, Pennsylvania solo consumer bankruptcy attorney.  He has been in practice for over 25 years in Real Estate & Mortgage Modifications; Debtor & Foreclosure Defense; Small Business, including Business Divorces; Elder Law; Technology, including Computer Law & E-Commerce & Entertainment Law. His background also includes significant experience as a financial planning analyst with a Fortune 100 Company.

Mr. Carr blogs regularly on debt and bankruptcy topics at


  1. Yes this is really true about bankruptcy. really great post. keep it up. But It is worth noting that when you file for bankruptcy, your creditors are no longer allowed to contact you. This is important. They can no longer call you, trying to collect on the debt. If they do call you, let your attorney know so that the offense can be dealt with properly.

  2. To help consumers regain their financial stability and educate them through the bankruptcy process we must learn about those thing . there are some who can provide an innovative platform of products and services for consumers those are called experts in bankruptcy.

  3. Nice post! it has a big contribution to everyone who is in the financial dilemma. Yeah it’s true that before going into bankruptcy. You must know first the advantages and disadvantages and what will be your benefits on it.

  4. Everyday Law Staff says:

    Yes, Lucy, unfortunately it seems to be the case.

    We offer legal advice if you ever need guidance:

  5. Tha Federation says:

    We 100% agree with the well thought out oversight of the bankruptcy process.

  6. Anonymous says:

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