Effects of Filing For Bankruptcy

The following is not financial, bankruptcy, legal or tax or any other type of advice or counseling. Please contact a professional in the appropriate field to review your SPECIFIC situation.

Bankruptcy does play an important roll in helping some consumers with serious debts and no way out. Unfortunately there are many misunderstandings about what bankruptcy can and cant do. More importantly is that there are long lasting affects of bankruptcy that are not all that obvious which consumers need to recognize before they make a choice to file for bankruptcy. Please consider these points on how personal bankruptcy affects all aspects of your life, for life.

"I can wipe away all my debts and start with a clean slate"
We have all heard this line before, but is it true? You wish. Certain types of debts cannot be discharged, or "erased". They include child support and alimony, student loans and debts incurred as the result of fraud. It's also very unlikely that a judge will discharge legal settlements you've been assessed, such as money you've been ordered to pay to someone who sued you. All recent purchases for non essential items ( say Christmas shopping) will be reviewed closely and might not be discharged in a Chapter 7. Figures vary but the number of bankruptcy filers that eliminate ALL of there debts is miniscule.

"Nobody will know that I filed for bankruptcy"
Some advocates of filing for bankruptcy will tell you that nobody will find out about your filing for bankruptcy. This is simply not true. Bankruptcy is a matter of public record and public records are free to get and free to use. The internet is full of websites and services where you can look up bankruptcy records with ease, some free and some with a small fee. Here is the Federal Government's website http://pacer.psc.uscourts.gov/cgi-bin/links.pl#BKCTS for bankruptcy court filings; it is called the PACER system. Today we can view our neighbors back yard with Google Earth, we can see what he paid for the house, taxes and just about the whole history of the home.. all for free. So do you really think that nobody can find your free and public bankruptcy case? Now think about how many times you looked up a neighbors or friends house to see what they paid for it... you know you have done it, how many people are going to look you up to see if you filed for bankruptcy?

Your credit worthiness and the real cost of borrowing money in the future.
If you file for bankruptcy you can expect that you won’t qualify for a credit card or any loan for a while. When you do qualify in the future you will likely pay the highest amount in fee's and interest rates possible under the law. Think about the cost of an extra 2%-3% on a car loan of $30,000 and a home loan for $400,000. This could cost you tens of thousands of dollars extra over the life of the loan. This is a major reason why people who file bankruptcy find themselves back in bankruptcy court only a few years later. The initial bankruptcy and poor credit has made their cost of living so high they can't afford even their basic necessities. It's a viscous cycle.

Buying and contracting services in the future
Need to change phone companies, put digital cable in your house, join a club store, or get a cell phone plan? Guess what, they’re going to run a credit check and you may not qualify. If you get lucky enough to qualify, you most likely will have to put down a large deposit to initiate the service. This is money you could have used for bills, savings or investing. Another additional cost due to bankruptcy.

Home Ownership and Personal Bankruptcy.
If you are behind on your mortgage payments, you will almost certainly lose your house if you file a Chapter 7 bankruptcy. (please consult an attorney in your state for specific details). Your mortgage lender will ask the bankruptcy court to lift the automatic stay to begin or resume foreclosure proceedings. In a Chapter 13 bankruptcy, you may not lose your house IF you resume making the regular payments called for under your agreement and repay all missed mortgage payments through your plan. Again, a thorough discussion with a bankruptcy attorney is best to understand the impact of a bankruptcy in your state.

Renting and Bankruptcy.
If you are planning to move in the next 7 years and you will be renting or buying a home, your bankruptcy will be haunting you once again. Very few landlords will lease or rent their property to a person who has filed bankruptcy. It is also very unlikely a bank will approve a mortgage to a person who has filed bankruptcy in the past 7 years. Would you lend money or rent your home to a person who has recently filed bankruptcy or would you rather find a person who has not filed bankruptcy?

Personal Bankruptcy and Your Job:
Today it is common practice for employers to do a background check on all potential employees, including a credit report. If you're applying for a position where money or valuables are involved will the employer trust you, or will they trust the other applicant who is not under financial distress and doesn't have a bankruptcy? Remember it is a Federal Offense to falsely state that you have not filed for bankruptcy on an application.

Your Health.
Going through a bankruptcy is very stressful. You will need to find and hire a lawyer, go to court, complete an inventory of your possessions and fill out complicated paperwork required by the court. Your neighbors, friends and family will likely know about your financial failings. Many people feel an overwhelming sense of failure which leads to depression, anxiety attacks, and other health related issues.

It is not a complete solution:
A personal bankruptcy may require that you sell certain assets to pay off creditors. Certain debts are NOT allowed to be included in your bankruptcy such as student loans, alimony, child support or "unnecessary purchases" made recently before the bankruptcy. So even after you file for bankruptcy and incur all this stress and pain, you still may have a considerable amount of debt to pay off! - (Please consult an attorney for specific allowances for bankruptcy protection in your state)

WHY GO THROUGH ALL THIS PAIN WHEN YOU HAVE ALTERNATIVES?

Debt settlement can give you the opportunity to avoid bankruptcy, pay off your debts and be debt free in as little as 12-36 months. How does this work? Debt settlement which is also sometimes called debt negotiation is a hardship based program. If you have a legitimate financial hardship which is forcing you to seek bankruptcy then you are an excellent candidate for debt negotiation. Creditors understand that if you file bankruptcy they risk losing all the money you owe them. If instead they negotiate with you through a qualified negotiation service and reduce your debt so it can be paid off, then at least they can receive a portion of the amount due to them. This is a win, win solution, you become debt free for a fraction of what you owe without filing for bankruptcy and your creditors receive at least a portion of the money owed to them.

To get a complete consultation and to find out if your situation qualified for a debt settlement program simply submit the request below. Finding out is free and there is absolutely no obligation to use debt settlement.

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