For people experiencing difficulty getting their debt under control, bankruptcy can be a final resort. This choice has short and long term implications. Those that are considering filing need to weigh the pros and cons of bankruptcy before making a decision.
It takes ten years before a bankruptcy disappears from credit statements. This embarrassing fact can have far reaching implications. Creditors are often unwilling to extend credit to those with bankruptcy on the record. Those that do often want cash as collateral. High interest rates and leery creditors are only one problem.
Trying to obtain a mortgage is challenging for those who declared bankruptcy. Though it eventually disappears from a credit report, the interim years are exceptionally challenging.
The only way to retain any credit cards is for the balance to be paid in full before filing. Even with that, some companies may reduce spending limits once the bankruptcy is final.
Some companies may repossess items that were recently charged. There are people who have had their vehicles removed from their place of business, adding to the embarrassment of the situation. New furniture and luxury items may also be subject to repossession.
When looking at filing for bankruptcy, one disadvantage is that not all outstanding debt can be cleared by it. Back taxes from the previous three years can not be dismissed. Additionally, student loan debt is rarely considered.
It is public information when a person files bankruptcy. The court records are accessible and some newspapers report the bankruptcies in their delivery area. Before a final judgement is given, the parties involved must explain how the finances got out of control.
On the other hand, filing for bankruptcy can be a tremendous relief. Creditors are referred to the attorney. This can reduce stress for a person incapable of keeping up with payments.
When an individual or couple file bankruptcy, some states allow them to keep their home and vehicle. Other necessities may also be included, depending on the circumstances involved.
Those who have far overextended their loans and credit to a point that it is virtually impossible to pay off may find that it is better to file and get it over with. Trying to stay financially afloat while getting deeper into debt can increase tension. Some may find it preferable to relieve the burden. The sooner the bankruptcy is filed, the sooner it will be gone.
The pros and cons of bankruptcy are not to be taken lightly. It is a serious decision that has far reaching implications. Before an individual or couple make the choice, consulting with a debt consolidation firm might provide a solution that protects credit. Understanding all of the intricacies of bankruptcy is a time consuming process. Studying the laws and examining how creditors handle bankruptcy can go a long way toward making the right choice. Although it may be difficult, or embarrassing, sometimes it is the best decision to make in the overall scheme of life.