Bankruptcy often gets a bad reputation as a way to ruin your credit and finances, but there are many positive things about filing. In fact, you are likely to find that when you are in a bad financial situation, filing bankruptcy is a beneficial move.
According to the American Bar Association, may of the cons of filing bankruptcy are issues that you would have regardless of whether you file or not when you are going through financial struggles.
The downside to filing bankruptcy is that it will impact your credit for up to 10 years because it stays on your credit report. However, if you already have credit issues, this could mean your credit improves a lot earlier than it would if you did not file bankruptcy.
Another con is that you may have to liquidate your assets, which means you will lose them. However, if your credit problems are enough to consider bankruptcy, then you could lose your assets anyway through court orders or repossessions.
Bankruptcy will help give you a fresh financial start where you no longer have to worry about debt collectors and potential lawsuits. You also can often keep many assets as they are exempt. Furthermore, you get rid of the debt that is causing you problems and stop all collection activity.
Because bankruptcy is only for serious financial situations where you are at risk of lawsuits and collections, you will likely lose far less by filing. In fact, it could actually improve your credit because it will remove all the bad marks for your debts.