The decision to declare bankruptcy is not an easy choice to make under any circumstances. And while it can help eliminate the stress and struggle of paying all your bills on time, if even at all, with it comes an array of consequences one must face, affecting your credit report, ability to get a loan or an apartment, and your overall reputation among other things. When filing for bankruptcy, there are loads of factors to take into consideration when determining whether it’s the right next step for you and your financial situation. Because despite all the cons, there are nearly just as many pros to consider when making your decision. As scary as it sounds as a last resort, it could be just the thing you need. Read on to learn more about declaring bankruptcy and how to get help today.
When to Consider Bankruptcy
When it comes to the struggle of paying off your debt, bankruptcy should not be your go-to solution for all your problems. There’s a pretty long list of things to assess about your own financial situation that may help you in determining just how dangerous your financial situation actually is. Provided you suffer from most if not all of these predicaments, it may be time to start to consider bankruptcy as an option. But you should speak to an attorney before making any final plans. A qualified attorney can help you to assess your current situation, and help you weigh the pros and cons of bankruptcy in regard to your specific needs.
Questions to Ask Yourself:
- Am I failing to make payments, or am I only making minimum payments on credit cards?
- Am I using credit cards to pay for a majority of my necessities?
- Do I feel like your finances are no longer under your control?
- Am I getting frequent calls from bill collectors?
- Am I aware of exactly how much I owe?
- Am I considering taking out another mortgage?
- Am I I considering debt consolidation?
Downsides of Bankruptcy
Bankruptcy presents a great deal of challenges once filed. Once filed, a borrower’s assets may be taken to pay creditors. And of course, credit cards will be taken away, though in the end this may be for the best. It can also wreak havoc on your credit report, with the bankruptcy tarnishing it for years to come. This can make things like getting a mortgage, exceedingly difficult. Additionally, you may have existing obligations such as a mortgage, student debt or child support that may still need to be paid, therefore not freeing you of debt entirely.
- It will stay on your credit report for up to 10 years.
- You may still have financial obligations that you’ll need to fulfill.
- You may have difficulty taking out loans.
- You can’t file for bankruptcy twice within a 6-year timeframe.
- You may lose your existing assets and credit cards.
Bankruptcy does offer its fair share of benefits for the person filing. For one thing, it doesn’t take long for bankruptcy to process, taking just up to 6 months. And starting bankruptcy sooner rather than later can help you start rebuilding your credit sooner. It also important to note that doesn’t make it impossible to get a mortgage or other loan, because there are lenders that are willing to lend to high risk borrowers, but you may have higher monthly payments. And because bankruptcy cannot replace obligations such as student debt, alimony or child support, eliminating as much debt as possible will make contributing to those obligations much easier.
Bankruptcy can make paying student debt and family obligations easier.
- You can have an easier time rebuilding your credit.
- The process only takes 3 to 6 months.
- You can still get specialized loans, even as a “high-risk.”
- There are no debt limitations as to the amount necessary to file.
Bankruptcy should definitely be considered a measure of last resort, though it doesn’t mean the end of the world. While you may struggle for the foreseeable future due to the impact on your credit report, it may be the best way to get a fresh start.