When deciding to declare bankruptcy, one must weigh the positives with the negatives of filing. Once major advantage, obviously, is the ability to get out of debt. This not only releases you from your debts, depending on which you file – Chapter 7 or 13 – but it also eliminates the harassing phone calls, etc. from collection agencies, and lets you start all over from basically the beginning again.
However, there are many major reasons why one shouldn’t file. For starters, a bankruptcy will stay on your credit report for up to 10 years before it is discharged. That means any time in the next 10 years you want to get credit for anything, it will be much tougher for you to get it and you will pay a much higher interest rate on whatever you go for. When a lender looks at your credit report, they don’t look to see what type you filed, all they care about is whether or not you filed at all. You are now a risky investment for them.
It can also affect your career, depending on what field you go into. Any job that involves any sort of financial responsibility will most likely run a credit check. Even if they choose not to, many applications have the right to ask if you have ever filed. If you have, you will be perceived as a threat to the financial stability of the organization. If you can’t handle your own personal finances, how will you handle those of a large corporation? It is one of the most important financial decisions you can ever make, so make it wisely. ■
For a comparison of Chapter 7 and 13 bankruptcy, refer to:
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