Bankruptcy may be seen as a quick fix solution to financial issues. However, the effects of bankruptcy are long term and can impair your ability to obtain employment, house, and any type of credit. It is important to weigh the pros and the cons of bankruptcy before making a major choice.
Admittedly, bankruptcy comes with a number of benefits. First and foremost it annihilates most of your debt. It can aid you with missed debt payments, defaults, repossessions and lawsuits. If you have horrible credit, it can get you started on rehabilitation.
Bankruptcy will stop the phone calls from creditors, collections letters, repossessions, declined charge authorizations, cancelled credit cards, and lawsuits. You can also keep your vehicle if you keep up on the payment; additionally, bankruptcy will permit you to hold on to your house if you remain current on the payments.
Bankruptcy will let you exit foreclosure and pay monthly payments on past amounts. Finally, it puts an end to creditors making a claim after it is filed, even if your financial situation changes for better or worse.
On the other hand, bankruptcy law offers a “fresh start” but only every six years in most instances. Bankruptcy will remain on your credit report for ten years and has a severe negative impact on your credit rating. Although some lenders allow for home loans after one year, filing bankruptcy might require a wait of two years before it is possible to buy a home.
Bankruptcy does not annihilate most tax debt. It doesn’t whipe out student loan debt. You will need to give up your credit cards. It might cause you to lose some of your things, and unfortunately bankruptcy carries a stigma that can be embarrassing.
If you are not sure whether to file bankruptcy or not, call your creditors to see what type of repayment plan they can work out with you. While bankruptcy is an option, in most cases it should be seen as a last resort.
Rapid Recovery Solution is a New York debt collection company.
