Most people do not set out to file bankruptcy, but sometimes it is necessary. If you have explored other options, and it’s still impossible for you to get out of debt – bankruptcy may be the lifeline you need.
Deciding whether to file for bankruptcy is a serious financial decision and the decision to file for bankruptcy is never easy. It is usually the last resort for people struggling financially.
The decision to file bankruptcy can be complicated, and many factors can affect your decision. It is best to talk to a qualified bankruptcy professional, such as a lawyer, about your options. Bankruptcy can have a lasting impact on your credit, and the pros and cons of filing must be measured against each other.
For instance, there are rules regarding eligibility to file for bankruptcy. If you have previously filed for bankruptcy and received a discharge, there are time limits that govern when you can file again. Also, there are income restrictions that govern whether you can file a chapter 7 or a chapter 13. If you make too much money, you may not be able to file a chapter 7, and may have to file a chapter 13.
Bankruptcy can stay on your credit report for years. Normally, a chapter 7 can stay as long as ten years, while a chapter 13 can stay on your credit report for seven years. This can affect your ability to get future credit. At the least, it will definitely affect the interest rate.
Bankruptcy does not deal with all debts the same way. For instance, if you want to keep secured items such as a house or car, you will have to keep paying on those items in order to keep them.
Normally unsecured debt (such as credit card debt) is discharged in a chapter 7. In a chapter 13, you may pay a percentage of unsecured debt back, depending on your income.
In the end, you must weigh the pros and cons of filing for bankruptcy. Bankruptcy can certainly be a powerful financial tool that can give you the fresh start you deserve. However, it will affect your credit and ability to get credit in the future.
The best course is to talk with a qualified consumer bankruptcy attorney who can analyze your financial situation and apply bankruptcy law to properly fit the situation. Bankruptcy can help people who are struggling financially get back on track, but it’s not the best solution for everyone.