Bankruptcy does offer a clean start. For those who are struggling with debts and just can no longer make ends meet, this seems like the right choice to make. But, before you head down that road, you should make sure that it is the right decision for you. There are many consequences to filing that you should know about. And, with new laws in place to make it harder to qualify for bankruptcy, you may also find yourself not knowing if you qualify for it.
What Does Bankruptcy Do?
Bankruptcy can be filed two ways. First, it can be filed to erase all of the credit claimed on the bankruptcy. It will wipe the slate clean for these credit grantors meaning that you will not owe them any more money. But, you may lose quite a few assets by doing this as the credit grantors try to reclaim their money. In the second type, Chapter 11, you file to reorganize your standings and to give yourself the ability to pay off the creditors in a way that fits your needs better.
Bankruptcy will stay on your credit report for ten years. During that time, you will have a much harder time apply for and getting credit. This is not only based on your ability to get new credit cards but also your ability to purchase a home or a vehicle as well. If you do find these options, they are likely to cost you quite a bit of money.
Things To Think About
Before you file bankruptcy, make sure that you have taken the time to insure that you have done all that you can to pay down your debt. Make sure that you take the time to keep your home and your car payments up to date as you may be able to keep these if you continue to pay on them.
When you do decide to file, talk to a good attorney and find out if you qualify. You'll want to find someone that you can trust and that you know will do a good job for you. You should insure that your fee schedule is set up before you sign any contracts and agreements with them. Your initial consultation may be free. Determine what you need to do to file, if you qualify and what problems may be out there for you.
Bankruptcy does give you the ability to start over when it is done right even though it is a long road ahead of you.