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Effects of Filing For Bankruptcy
Bankruptcy does play an important roll in helping some consumers with serious debts and no way out. Unfortunately there are many misunderstandings about what bankruptcy can and cant do. More importantly is that there are long lasting affects of bankruptcy that are not all that obvious which consumers need to recognize before they make a choice to file for bankruptcy. Please
consider
these points on how personal
bankruptcy affects all aspects of
your life, for life.
"I can wipe away all my debts and start with a clean slate"
We have all heard this line before, but is it true? You wish. Certain types of debts cannot be discharged, or "erased". They include child support and alimony, student loans and debts incurred as the result of fraud. It's also very unlikely that a judge will discharge legal settlements you've been assessed, such as money you've been ordered to pay to someone who sued you. All recent purchases for non essential items ( say Christmas shopping) will be reviewed closely and might not be discharged in a Chapter 7. Figures vary but the number of bankruptcy filers that eliminate ALL of there debts is miniscule.
"Nobody will know that I filed for bankruptcy"
Some advocates of filing for bankruptcy will tell you that nobody will find out about your filing for bankruptcy. This is simply not true. Bankruptcy is a matter of public record and public records are free to get and free to use. The internet is full of websites and services where you can look up bankruptcy records with ease, some free and some with a small fee. Here is the Federal Government's website http://pacer.psc.uscourts.gov/cgi-bin/links.pl#BKCTS for bankruptcy court filings; it is called the PACER system. Today we can view our neighbors back yard with Google Earth, we can see what he paid for the house, taxes and just about the whole history of the home.. all for free. So do you really think that nobody can find your free and public bankruptcy case? Now think about how many times you looked up a neighbors or friends house to see what they paid for it... you know you have done it, how many people are going to look you up to see if you filed for bankruptcy?
Your credit worthiness and the real cost of borrowing money in the
future.
If you file
for bankruptcy you can expect that you won’t qualify
for a credit card or any loan for a while. When you do qualify in the future you
will likely pay the highest amount in fee's and interest rates possible
under the law. Think about the cost of an extra 2%-3% on a car loan of $30,000 and a home loan for $400,000. This could cost you tens of thousands of dollars extra over the
life of the loan. This is a major reason why people who file bankruptcy
find themselves back in bankruptcy court only a few years later. The
initial bankruptcy and poor credit has made their cost of living so high they can't
afford even their basic necessities. It's a viscous cycle.
Buying and contracting services in the future
Need to change phone companies, put digital cable in your house,
join a club store, or get a cell phone plan? Guess what, they’re
going to run a credit check and you may not qualify. If you
get lucky enough to qualify, you most likely will have to put
down a large deposit
to initiate the service. This is money you could have used for bills, savings or investing. Another additional cost due to bankruptcy.
Home Ownership and Personal Bankruptcy.
If you are behind on your mortgage payments, you will almost
certainly lose your house if you file a Chapter
7 bankruptcy. (please consult an attorney in your state for specific details). Your mortgage lender will
ask the bankruptcy court to lift the automatic stay to begin
or resume foreclosure proceedings. In a Chapter
13 bankruptcy, you may not lose your house IF you resume
making the regular payments called for under your agreement and repay all missed mortgage payments through your plan. Again, a thorough discussion with a bankruptcy attorney is best to understand the impact of a bankruptcy in your state.
Renting and Bankruptcy.
If you are planning to move in the next 7 years and you will
be renting or buying a home, your bankruptcy will be haunting
you once again. Very few landlords will lease or rent their
property to a person who has filed bankruptcy. It is also
very unlikely
a bank will approve a mortgage to a person who has filed bankruptcy
in the past 7 years. Would you lend money or rent your home to a person who has recently filed bankruptcy or would you rather find a person who has not filed bankruptcy?
Personal Bankruptcy and Your Job:
Today it is common practice for employers to do a background
check on all potential employees, including a credit report.
If you're applying for a position
where money or valuables are involved will the employer trust
you, or will they trust the other applicant who is not under financial distress and doesn't have
a bankruptcy? Remember it is a Federal Offense to falsely state
that you have not filed for bankruptcy on an application.
Your Health.
Going through a bankruptcy is very stressful. You will need to
find and hire a lawyer, go to court, complete an inventory
of your possessions and fill out complicated paperwork required
by the court. Your neighbors, friends and family will likely know about your financial failings. Many
people feel an overwhelming sense of failure which leads to
depression, anxiety attacks, and other health related issues.
It is not a complete solution:
A personal bankruptcy may
require that you sell certain assets to pay off creditors. Certain
debts are NOT allowed to be
included in your bankruptcy such as student loans, alimony,
child support or "unnecessary
purchases" made recently before the bankruptcy. So even
after you file for bankruptcy and incur all this stress and
pain, you still may have a considerable amount
of debt to pay off! - (Please consult an attorney for specific allowances for bankruptcy protection in your state)
What Options Do You Have to Avoid Bankruptcy?
Use our free service to get a free consultation from approved and reputible debt negotiation services to eliminate debts and avoid bankruptcy.
Submt a request below and a professional debt negotiator will answer all your questions, provide program details, determine if your situation is right for debt negotiation and most importantly estimate how much your debts can be reduced by. You will get all costs associated with their service free and UP FRONT before you make any decision. It only takes a few minutes to generate your evaluation, however you can spend as much time as you wish getting all your questions answered.
If at the end of this consultation you are comfortable with the service and debt reduction amount you can start right away, most companies can get everyting started online. If you feel this is not the right solution for you, you have absolutely no obligation or cost. Simply thank your counselor and say goodbye.
It's that simple to find out if you can avoid bankruptcy and reduce your debts.
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