Sometimes people consider bankruptcy to be an easy option to free themselves from the burden of mounting debt. In fact, rather than addressing the root of the problem this the first option that comes to their mind. The truth is that this may eliminate the burden but its not an easy thing to do. Furthermore, bankruptcy should always be your last option.
At first glance it may seem that the filing process for bankruptcy is very easy. But, its not that trivial. The justification for your filing will begin with showing your financial history to a judge and it will also be open to any objections that your creditors might have. More than likely, your creditors will fight tooth and nail to get their money back rather than willing to settle.
In the event that you actually are able to file bankruptcy successfully, you should consider the effects of this action on your future.
Credit cards with any balances outstanding will be lost while some other creditors will close your accounts. Getting a large credit line or a home loan at an affordable interest rate will be near impossible.
You will still owe debts such as taxes owed from the past 3 years, student loans, and any others which are exempt from bankruptcy protection.
How long will this last you ask? Ten years! During these ten years, you will have to maintain a spotless credit history to get a level where creditors can trust you to a certain degree. On your credit history, the bankruptcy will stand out as the most negative criterion. This is much worse than a low FICO score.
These are the effects of your credit. Besides these, you could have to give up any other assets depending on when you got them. You will not lose your house and your car in most states. However, if you have additional vehicles or real estate these might not be protected.
Don't forget that this procedure of filing bankruptcy is not free. There will be costs associated with the courts and of course your attorney is also going to charge you. These costs will only compound your financial misery.
All is not lost. You will be able to obtain some breathing room to start the recovery process of your financial situation. Your debt collectors will stop bothering you. If they don't notify them of your filing. Any actions of foreclosing your house will stop. If you are contemplating filing bankruptcy, you will be better off by filing sooner than if its too late. The sooner you file, the sooner you will be on your way to rebuilding your credit history (perhaps better than the one you built last time around).
Now that you won't have credit cards this might be a blessing in disguise. You will have another opportunity to change your spending habits.
Do your due diligence before you take the big step. Good luck!
Many of those people who decided to declare bankruptcy felt that they had no way out of their debt. It has become overwhelming and seemed hopeless. While there might have been other options still available these folks went with a familiar solution. In a way, it is understandable. Yet was it necessary? If you are in a bad debt situation where no matter what you try, it seems like the debt load grows heavier. You, too, may be considering bankruptcy. You need to think again because the consequences can be costly.
Most financial advisors say that bankruptcy should only be used in extreme cases and only as a last resort when very other method has been exhausted. How do people get into such a mess? A major source of debt is the credit card. It is far too easy to accumulate a tremendous card balance that leaves you paying indefinitely on interest while making no progress towards actually paying the balance off.
Probably the most common source of debt is financial mismanagement. It includes people who live far above their means and those who make bad investments. Other sources of debt, which are more commonly associated with bankruptcy, include those that the consumer had little to no control over. This could be anything from loss of job or layoff to big medical bills and legal fees.
If you are considering bankruptcy, you need to understand that it is not a simple matter of erasing the debt. The laws have been changed recently and restrictions have been established to cut down on the numbers of people who can actually declare bankruptcy. Even if you make it past the application process, there is the chance that the court will not approve you bankruptcy file and you will be out of luck as far as any debt relief is concerned.
If you still want to go through with it despite to possibility that you won't qualify, then you should take the time to consult a bankruptcy lawyer to make the best case. They may also be able to help you find different options if the possibility of rejection is high.
What are the consequences of declaring bankruptcy? First, your credit rating will be affected for years afterwards, as long as a decade in some cases. Your credit score has more influence than it once did. Not only will be a decisive factor on whether you are eligible for a loan in the future but will determine how much you will have to pay each month if you are approved.
Rather than bankruptcy, have you considered debt consolidation? It is far less damaging to your credit than filing for bankruptcy status. You should some research about debt consolidation and bankruptcy as well. Compare the pros and cons. Ask for advice from those who went through bankruptcy. Contact a financial consultant who specialized in bankruptcy counseling and debt assistance services. Don't settle for bankruptcy when there could be other ways to remove the burden of debt from your shoulders.
Both Mike Singh & Joseph Kenny are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mike Singh has sinced written about articles on various topics from Home, Fishing and Dental Insurance. Tired of making payments and seeing the interests and penalties pile up? It doesn't have to be that way, check out '. Mike Singh's top article generates over 368000 views. to your Favourites.