Personal Bankruptcy (part 5)

Making your decision on filing bankruptcy – the disadvantages

If you just finished reading our debt free article about bankruptcies, you know about the advantages of filing bankruptcy. Well, just as there are pros and cons for most everything in life, there are in bankruptcy as well. Your fresh start will have some baggage. If it did not, everyone would file and I do not think any of us would want to live in a country where everyone was bankrupt - am I right?

Before you decide whether bankruptcy is the best route for you to take when fixing your debt trouble, you have to weigh the advantages against the disadvantages. This article will cover the disadvantages for you. After reading this article and thinking long and hard about the disadvantages of filing bankruptcy, you may actually seek other ways to combat your debt trouble. Whatever your situation and whatever you decide, you have to think long and hard as this decision will impact your life fro many years to come.

Disadvantages

While you may feel free of debt right after your bankruptcy is filed, anything you want to do that involves credit of any kind - like a car loan, renting an apartment and even signing up fro utilities – anything that requires a credit check and will show your bankruptcy. This will take place for 6 t 10 years after your bankruptcy is filed – so be aware. You may find that some creditors will extend credit to you after you, but only after you provide them with a written explanation of your bankruptcy filing. If you do get credit, your interest rates will probably be terrible. You should be aware that this could cause you further problems as it will be hard for you to pay off the credit if the rates are too high. So be certain you understand what will happen to your credit standing before hand. As we said, a bankruptcy will show on your credit standing for at least 6 years. If you paid the debt off without filing, you would probably get better rates in the nearer future as well.

As we mentioned, utility companies may also consider you a higher risk customer and require you to post a substantial deposit on your account before service is rendered with them. The deposit you post will cover any outstanding payments you may owe the company if they have to cut your services off.

So, in the beginning, you may get theta feeling of debt relief, but in the long run, your credit standing may prevent you from getting the services you need in life without having to provide a deposit or suffer from high rates of credit interest.

You may not be that concerned with being considered a high risk customer because after filing a bankruptcy the last thing you feel you will want o do is to get into more debt by applying for a credit card, but you will have to start reestablishing your credit and high rate swill ensue when you are on the road to reestablishment. You will find it harder to rebuild your credit with the higher interest rates you have to pay, so be aware. In the future – after you file – you will run into issues from your bankruptcy don the line, some times it will be not getting the dream house you may have always wanted, maybe it will be something really small – whatever the case, you have to be prepared for this. While the road to financial recovery is shortened by bankruptcy, it is not a smooth road. If you are willing to withstand the consequences of bankruptcy, it is the right decision for you.

Keep in mind, if most of your debts are the kind of debt that cannot be discharged in a court of bankruptcy, like student loans, child support, taxes and such, it will not make much sense fro you to declare a bankruptcy. You will need to recover from your debt in some other manner. Try making more money – get an extra part-time job. Seek credit counseling or sell some of your assets on your own to pay off extra debt. For example, sell your boat if you need the money fro paying off debt.

Bottom line – you should try to avoid bankruptcy unless your situation posses absolutely no other way out. If you do have to file, you are not a failure either – at least you are taking some sort of responsibility for your previous debt accrual actions.

Be sure to continue on to the next section of this debt free article regarding bankruptcies. The next section will cover how you can reach your decision to file or not to file bankruptcy.

Part 6…

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