Bankruptcy is generally seen as a quick fix solution to financial problems. Yet the effects of bankruptcy are long term and can hinder your ability to get employment, house, and any type of credit. It is important to weigh the pros and the cons of bankruptcy before making a major choice.
It is a fact that bankruptcy comes with a number of benefits. First and foremost it annihilates most of your debt. It can aid you with repossessions, missed debt payments, defaults and lawsuits. It can get you started on rehabiliation if you have poor credit.
Bankruptcy will stop the phone calls from creditors, collections letters, repossessions, declined charge authorizations, cancelled credit cards, and lawsuits. You can also keep your vehicle if you keep up on the payment; additionally, bankruptcy will permit you to hold on to your house if you remain current on the payments.
Bankruptcy will let you exit foreclosure and pay monthly payments on past amounts. Finally, it puts an end to creditors making a claim after it is filed, even if your financial situation changes for better or worse.
Conversely, bankruptcy law can offer a “fresh start” but only every six years in most cases. Bankruptcy will stay on your credit report for ten years and hurts your credit rating severly. Additionally, filing bankruptcy may require a wait of two years before it is possible to buy a home. Some lenders allow for home loans after one year however.
Bankruptcy does not clear away most tax debt. It does not annihilate student loan debt. It requires that you hand over your credit cards. Unfortunately, bankruptcy comes with a stigma that can be embarrassing, and it may cause you to lose some of your things.
If you are not sure if you should to file for bankruptcy or not, call your creditors to figure out if there is a repayment plan they can work out with you. Even though bankruptcy is always an option, in most cases it should be seen as a last resort.
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