Are you in over your head with bills? Do you feel like you’re drowning in past poor decisions? And no matter what you do they never seem to get off your back? It’s a sad state to be in when you feel debt has suddenly piled up and taken over while income seems to have reduced or gone out of the window completely. If you’re feeling overwhelmed by credit card debt you think will never be paid off, your thoughts may have already turned to bankruptcy.
Although applying for bankruptcy could be the only way to get creditors off your back, it still imposes a heavy price to pay. The implications may and usually do outweigh the advantages. Before you decide to file, consider the multitude of risks that bankruptcy brings. Filing for bankruptcy means a lasting mark on your credit report. Most bankruptcies will haunt a credit report for up to 10 years. The law allows the information to be public and therefore is stored for a considerable amount of time. With the electronic nature of records, many of those public bankruptcy records can be easily found by anyone. For just a few dollars people can purchase a record of you online. And any banks you deal with in the future will know about your bankruptcy and will consider you a poor risk because of your obvious poor money management.
Bankruptcy can also cause problems for your friends and family. If you purchased gifts for them during the year you filed, it could be returned to pay back debt. This is because an individual going broke can’t “hide” their cash by giving it to buddies and family. So, even if you weren’t intending to do anything sideways, like hide cash, the law is the same. That pretty present you gave your mummy could be snatched to payoff your debt.
Your financial history will be impacted. The credit companies store info on you which forms your credit status as noted above, often referred to as your credit history or credit history. The credit score is impacted by how well you pay off debt among other things. Filing bankruptcy will lower your credit score because you are showing that you made poor financial decisions and are not paying off your debt. This is the only way creditors have to base your credit worthiness when determining if they want to lend you money. Potential banks glance at the score from the credit companies before making a decision. Bankruptcy is one of the most important negative impacts on your credit report. You’ll suffer the humiliation of having a bankruptcy on your record.
Your parents, or older relatives from a different generation may not be willing to accept bankruptcy as anything apart from a mess up. They may be upset with you for not keeping your word and taking care of your debt(not to mention the poor planning that got you into this mess in the first place.)
Before looking into bankruptcy, be sure you’ve exhausted all other avenues to paying off your debt first. In some cases, bankruptcy might be unavoidable, but before filing, keep these things in mind.
Thanks for taking the time to learn more about bankruptcy. See one of the author’s other interests over at his retro track jacket and his soccer jacket web pages. Looking sporty and stylish was never easier.
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