Filing for bankruptcy is one of the worst entries that can be found on your credit report. It can very ruin your credit score and cripples the potential for borrowing credit in the future. A bankruptcy filing can continue to affect your credit long after it has all of your credit report which will typically take 7 to 10 years since most of the creditors are liable to ask you if you have ever filed for bankruptcy in the past. The law requires every consumer to answer truthfully to the questions of the creditor and failing to do so makes you guilty of fraud which can lead to prosecution. It is always better to pay off your debt and avoid bankruptcy. Filing for bankruptcy can also have an effect on the self-esteem of a person as it may lead to a feeling of being a failure even years after filing.
It is definitely better to avoid bankruptcy if you can. However, under certain circumstances it may be better for you to file for bankruptcy. After all the bankruptcy law does exist for a purpose. If you’re considering whether or not bankruptcy is the right step for you, here are the few questions that you should consider.
Have you tried negotiating with your creditors?
Before you file for bankruptcy thinking that you do not have enough money to pay off your existing debt you should try and negotiate with your creditor as that can result in the total amount being reduced drastically. Your creditor may be willing to work with you so that he can recover as much of this money as quickly as possible and without going through the lengthy process of the courtroom proceedings.
Have you sought credit counseling?
You should definitely look into credit counseling before considering filing for bankruptcy. A legitimate and accredited credit counseling service can not only present you with a finance plan that helps you come up with extra disposable income but can also negotiate with the creditors on your behalf to lower your monthly payments and the interest rate.
Are your wages getting garnished?
If some of your lenders have already got judgments against you, it is possible that your wages are already being garnished to pay them off. Filing for bankruptcy will stop the wage garnishment leading to more income and may get you some of the garnished money back.
Do you have uninsured medical bills?
Medical bills are one of the top reasons for bankruptcy filings. If you have medical bills that you cannot afford to pay back due to the fact that you do not have insurance for them, or because they are not covered by your health insurance, you can discharge them completely of pay them with a 3-5 year repayment plan when you file for bankruptcy.
Do you have assets?
If you have assets that are secured by a loan such as a house and a car, you may be able to keep these by filing for bankruptcy.
Do you risk getting sued?
If you have been sued in the court by a creditor or have received summons you should not ignore this. You should consult an attorney immediately. Filing for bankruptcy can prevent any one obtaining a judgment against you.
Take the Advice of an Attorney
Always consult a good attorney when considering bankruptcy. There are many different situations that can be dealt in different ways. Bankruptcy filing is also complicated as a lot of paperwork needs to be filed. A good attorney will be able to advice you if bankruptcy is a good option for you and whether it will have the effect that you are hoping it will.
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