Choosing a bankruptcy will seriously damage your credit score
more than just about any other debt relief solution. Bankruptcy will ruin your credit score for many years. Most people understand, after a bankruptcy, they will not be able to get loans but few people realize that bankruptcy will impact their entire life and that of their family in many unforseen ways.
On the positive side, bankruptcy is a federal court proceeding that either wipes out all of your debts or allows you to pay off just a small fraction of your debt while erasing most of your debt. While bankruptcy does ruin your credit rating, it will also allow you to dig out from under overwhelming debt. This gives you a clean slate and a chance to establish a good credit rating in the ensuing years. A bankruptcy will no longer show up on your credit report after ten years.
If you are very seriously in debt and have no way of repaying your bills, a bankruptcy can help you by stopping collection agencies from contacting you. Also, if you have been very negligent in paying your debts, your credit rating has already likely suffered greatly so bankruptcy may make little difference in your credit score.
Bankruptcy is especially advantageous if you have large debts that you could never pay off no matter what you do.
On the negative side, going bankrupt is no longer an easy way out and it costs money up front. New federal law makes it tougher to declare bankruptcy. Creditors can challenge you. If the court finds you have an income or assets that could pay back some of your debts, you may still be forced into a repayment plan instead of all out bankruptcy. You need counseling to decide your best legal options.
Make no mistake, going bankrupt is a very serious step. It is not just a ‘black mark’ on your credit report, it is a huge red flag to lenders. After a bankruptcy, you will be ineligible for credit cards, many other types of credit, and will even be told what you can and cannot buy. The whole process can also be emotionally draining. Bankruptcy should only be chosen as a last option if you really require your debts to be forgiven because you have no way of repaying them.
Choosing whether to go bankrupt requires some professional advice.
Bankruptcy advisers can help you decide whether to seek bankruptcy and how to proceed once you do decide to file. Then, a lawyer is hired to represent you in bankruptcy proceedings. This will likely cost you more than $1,000 up front depending on the legal firm you hire.
To read more about bankruptcy law:
http://law.athlonnews.com/
http://law.athlonnews.com/
