You Should Not File Bankruptcy – Consider Your Options Carefully
With the economy being as sluggish as it is, more and more people are getting deeper and deeper into debt. If you find yourself struggling, you should know that you are part of a growing group of people. You may have even questioned whether or not you should file bankruptcy. After all, the companies and lawyers who sell bankruptcy services make it sound like such an easy solution. They claim all of your debts will be wiped out and you will be able to start fresh.
While that sounds wonderful, there’s more to it than that. Before we get into some reasons why you should not file bankruptcy, it’s important to know that being in debt most likely isn’t your fault. You had every intention of paying everything back when you took out your loans or charged things to your credit cards. Not only that, you also had the capability to do so. But then your creditors started playing their games and hit with all kinds of fees, or maybe you had an unexpected emergency that cost more than you could handle at the time, or maybe you were a victim of the bad economy and had a drastic reduction in your income. Whatever the reason, you are now at a point where something must be done.
Bankruptcy shouldn’t be considered as an option if you can pay off what you owe in a few years. You will need to list all of your debts, then calculate how long it will take for you to repay them. Figure out how long it will take if you pay the minimum monthly payments, and also how long it will take if you pay more than the minimum. This is only part of the equation because you have to be sure you have enough income to cover whatever amount you come up with. If you can get your debt under control in three to five years then you probably should not file for bankruptcy.
Not all debts will be erased if you file bankruptcy. Most may be eliminated, but things like back child support and student loans will not be wiped out. You will still have to pay the full amount on those. No matter how good the bankruptcy pushers make it seem, there are some obligations that will not go away. So, you need to consider what kind of debt you have before you even consider bankruptcy as an option.
If you will be in the market for a new car, new home, or anything that requires a credit check in the next ten years, then you should not file bankruptcy except in the most extreme of cases. That’s because it will stay on your credit report for ten years, and will make you a very high credit risk, a risk that creditors may not be willing to take.
To put all of this another way: you should not file bankruptcy if you have been led to believe it’s an easy solution to your financial problems. Now, that doesn’t mean you shouldn’t file, but that you should be realistic about what it entails.
Declaring Bankruptcy- Is It For You
Mounting debt is no fun. The worst part of it all is that once you reach the tipping point it just keeps getting more and more out of control. If you have thought about declaring bankruptcy then you are not alone. The state of today’s economy has caused an ever-growing number of people to file bankruptcy. These are hard working people who had every intention of paying what they owe, but then circumstances out of their control made that next to impossible. Before you make the decision–one way or the other–you should know some of the pros and cons of declaring bankruptcy.
1. If you are really deep in debt, and most of what you owe is credit card debt, then bankruptcy can eliminate or drastically reduce how much you eventually pay. However, it won’t eliminate all kinds of debt (such as back child support or student loans), so you need to consider what type of debt you’re carrying.
2. Your creditors are not allowed to contact you once they are notified that you have declared bankruptcy. They either have to deal with the court or your attorney. In effect, you lose control of how your creditors will be paid (or even if they will be paid), so there isn’t any good reason for them to be calling you anyway. Not being harassed by the constant stream of telephone calls is one of the pros of declaring bankruptcy.
3. Having a clean slate financially is a good reason to file for bankruptcy. It will give you the opportunity to start fresh and get it right from this point forward. This clean slate will also apply to your credit report (sort of). The debts covered under the bankruptcy will be removed but…
4. One of the major downsides of declaring bankruptcy is that it will leave a negative mark on your credit report for a full ten years. Also, while you won’t be listed as owing money to the creditors who were paid off, they can make a note saying they were not paid back under the original terms of your agreement.
5. It’s a hassle. The new bankruptcy law makes you jump through a fair number of hoops before you’re allowed to file. You will have to provide all kinds of financial information, and there is also an income qualification for some types of bankruptcy. In some cases you may have to attend credit counseling as part of the process.
6. What a lot of people don’t realize is that going bankrupt causes a lot of stress. Many marriages have come to an end as a result. People can become depressed after filing for bankruptcy, too. Then there are those who a lowered sense of self-esteem because they feel bad about not being able to live up to their word to pay back what they owe. You may scoff at these things, but they are a very real problem for a lot of people, and should be considered when thinking about declaring bankruptcy.
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