7 Reasons why YOU SHOULD AVOID BANKRUPTCY!
Published by admin on March 15, 2010
7 Reasons why YOU SHOULD AVOID BANKRUPTCY!
Are you interested in getting out of debt with the help of bankruptcy? Think again! Before taking any decisions in your financial life, you must know exactly how is this going to affect your financial life on long term. By filling out bankruptcy you can improve things on short term, but if you will think on long term, the things are not that bright. Not only that the moment you file bankruptcy you are going to ruin your credit for the next 10 years, but you can also risk your property at the same time.
The bankruptcy represents a federal court process. Here a debtor will get the chance to eliminate the debt or reorganize it. If you are a consumer (not a company) you can file either the Chapter 7 or the Chapter 13 personal bankruptcy.
IN this article we are going to present you the reasons why you should avoid filing bankruptcy. This way you will better understand what you are getting into.
- One of the main reasons why you should avoid filing bankruptcy is the fact that your credit score is going to be hurt badly. The moment you file bankruptcy you can expect your credit score to go down by 200-250 points. Along with that, a bankruptcy is going to stay in your credit report for the next 10 years, so every time you will be applying for a loan the lender will see that and this way it’s going to be impossible to get a decent loan.
- Under the current bankruptcy laws there are certain assets that cannot be protected from your lenders. This means that you could have your house sold by your lender in order to cover you debt. This can happen if you file the Chapter 7 bankruptcy. This means that if you are not going to qualify for the federal or the state exemptions, you will risk losing your house or car when you’re filing bankruptcy.
- Bankruptcy is not going to help you eliminate 100% of the debt you have. There is a myth created among the fact that the Chapter 7 can help you get rid of all the debt you have. This is not going to happen. For example you will not get rid of the tax debt or the student loans that you have, by filling the Chapter 7.
- There are also other adverse effects that you will get after you file bankruptcy. For example it’s going to be a lot harder for you to rent or buy a car or home. The credit score has a direct influence on your status of financial security and the moment there will be “Bankruptcy” written there people will stop trusting you and this way they will try to avoid you.
- After you’ve filed bankruptcy getting approved for a new loan is going to get very tough. This means that it’s going to take at least 2 or 4 years in order to be able to get a secured loan (the type of loan you need to get a car or home).
- Not all the retirement plans are protected by the bankruptcy laws. This is why you must make sure that you will not lose your retirement money when filling out bankruptcy. Even if the 401k retirement plan is protected by the bankruptcy law, there are some plans that are not protected.
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