Steer Clear From Going Bankrupt At All Cost!

Steer Clear From Going Bankrupt At All Cost!

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It goes through many peoples minds when struggling in debt, at one time or another have thought about the option of going bankrupt. In this writing I am going to give you three very solid reasons why you should evade a bankruptcy proceeding at all costs, if possible. A lot of people don't realize the devastating negative impact a bankruptcy can have.

1. Filing for bankruptcy has an very negative effect on your credit rating and becomes a lifetime public record!

A bankruptcy proceeding is one of the nastiest negative remarks that can be logged on a credit report. Thus making any additional credit you try to get extremely difficult, and if you do obtain credit it usually comes with a pretty elevated interest rate. Additionally, it will stay on your credit report for between 7-10 years. Even when it gets removed from your credit report it remains a public record for the duration of your existence. So when you apply for new loans at any point in the future, if asked the question whether you have ever filed bankruptcy by law you must answer yes.

2. New Bankruptcy changeover in 2005!

In 2005, our government approved a law which forces anybody filing for a Chapter 7 bankruptcy proceeding, which will wipe the plate clean of all your debts much harder. Basically if you have an money and assets than most assuredly you will go through a review to find out if you should do credit counseling first for at least 6 months. According to NFCC close to 80% of people who apply can not follow the strict guidelines set from the creditors to complete the program thus tossing them back into the bankruptcy filing. That's when Chapter 13 comes into play which is a form of personal bankruptcy in which the court will decide how much you will pay back each collector you list based on your monetary situation.

3. The court will control your income with a Chapter 13 Bankruptcy!

Prior to the new law being approved in 2005 many people that would have been able to claim Chapter 7, were now made to go Chapter 13 instead. Chapter 13 requires that you review with the court and make available all of your financial information. You must show all sources of income and assets. The court will go over your expenses compared to your income and then determine how much money you will have to deal out each month. You have pretty much no say in this process. If you have liquid assets such as a house they can make you sell them off, within State law, to pay down your debt. There are timed financial hearings each year and if your income increases you must tell this to the court, this could bump up the amount you pay back. If you have two family vehicles you might have to sell one to pay down the debt. They for lack of better words tell you what you can do with your income. If you have the higher costing cable you will be forced to cut down to normal cable, if you consume high priced steaks every night you will need to cut back to burgers. This could be a tremendously hurtful and embarrassing proceeding.

These are all extremely negative things that debtors should be made conscious of before dealing with a bankruptcy lawyer. A lot of attorneys will not disclose these bad facts of bankruptcy. Bankruptcy is available for a purpose and for some people they have no other option available to them and must file for a bankruptcy proceeding, however a lot people go into bankruptcy when it could have been avoided. A very nice alternative option to bankruptcy is debt settlement.

About the Author:
Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.



Article Originally Published On: http://www.articlesnatch.com


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