What You Need To Know About Bankruptcy

By - Christiana Bridges On Mar 12, 2014

What You Need To Know About Bankruptcy

Planning to file for bankruptcy? Defeat is something we all want to avoid as much as possible and that includes getting into bankruptcy. It would probably be the lowest point in someone's life. Statistics show that most would want to avoid the ordeal as much as possible and that is with a valid reason. Filing for bankruptcy does have detrimental effects on the credit of the individual which can stay on the credit reports for years. On the other hand, if you really are in the situation wherein you can no longer pay for your debts, not filing for bankruptcy will cause a similar effect on credit. It can eventually come to a point that filing for bankruptcy is a wiser choice. So what are the pros and cons of filing for bankruptcy? Read on and find out!

Disadvantages

We will first talk about the cons of filing for bankruptcy so that you can have a clear picture of what will happen after this process.

  • Credit is weakened temporarily. Filing for bankruptcy will have a negative impact on your credit score, which can be reflected on your credit report for seven to ten years. Hence, this impact will diminish as time goes by and as your fill in your credit report with better actions and there are ways you can get it removed sooner.
  • Increased difficulty in getting loans. As an immediate effect of the previous disadvantage, there will be an increased difficulty in getting loans as your bankruptcy becomes obvious and stated in your credit account. However, there are lenders that will give you money even with a bankruptcy, so keep looking!
  • Increased difficulty in getting work. Aside from the financial downfall of getting into bankruptcy, apparently some companies now look into credit records aside from criminal background and other common things employers inspect from a potential employee. Sadly, some consider those with histories of bankruptcy a good reason not to hire someone.

Advantages

Even will all the negative impacts bankruptcy would impart to an individual, there's a brighter side of it that one must see. Remember that bankruptcy exists to protect people with debt and financial problems from making it worse. Therefore, you can expect some positive results of filing for bankruptcy which are the following below.

  • Cessation of creditor contact. An individual that into a lot of debt and financial trouble would likely have a frequent contact with the creditors and the financial institutions he or she has debt to. When bankruptcy is filed, a legal protection takes place for the individual wherein it will prohibit the creditors from contacting you. This protection is called the "automatic stay". This protection will also halt threats of foreclosure on your properties, stop repossession of assets, stop lawsuits and wage garnishments and others. You can be freed from phone calls and other means of contacting you from these people and organizations.
  • A fresh start. After filing for bankruptcy, the next major step in your financial status is starting anew. It would be harder to put your finances back to better conditions when you are in debt compared to when you are starting from zero. Assuming that you bankruptcy case ended well for you, you will certainly be in a better financial condition compared to the period before you filed for bankruptcy and full of debt.

Depending on how you impart knowledge upon this ordeal, the experience will likely strengthen your future. Mistakes are the best teachers in life they say. Aside from the experience, attending a debtor education course will surely help you avoid getting into a similar financial trouble in the future. Surely, most people would want to avoid bankruptcy, but when you are indeed in financial trouble today, weigh in the pros and cons before filing to see if it will make you better off going for it. Also, see a reputable bankruptcy attorney to make sure you understand the process and your legal rights. If you decide that bankruptcy is the best option for you, there are critical steps you must take after it’s discharged to rebuild your credit, but it can be done.

Remember, bankruptcy isn’t a dirty word, so don’t be ashamed and don’t do it alone!

For more information or a FREE credit assessment register at www.goodcreditwithchris.com.

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