Debt Consolidation Help on Before Filing for Bankruptcy

By: Ian Wilkie

Some people regard bankruptcy as a simple method to offload a killing debt problem, and it is sometimes the first system they reach for, well it might relieve the problem, however it is far from simple and had better be the very last action you use to achieve debt relief.

Whilst the law has made it relatively simple to actually file papers, the system like any other legal proceeding is far from effortless, you will still have to justify your filing, revealing all your financial history to a judge and opening it to objections by creditors, should you actually owe the cash, they are unlikely to settle easily for 10 or 15 cents or in many cases less, on the dollar.

Even if you are successful, there are multiple long term impacts that you will want to consider carefully before taking such a drastic step.

You may lose any credit cards that have remaining balances, and others could elect to close your accounts, you will also find it difficult to get a home loan or other considerable credit line , except possibly at the kind of ruinous interest rates that most probably led, in part to your current debt problem, also, not all debts are covered even by a bankruptcy filing, student loans, back taxes within the past three years and a range of other debts are typically exempt from bankruptcy protection.

This situation will persist for up to 10 years, during which time you may need to maintain a near perfect credit history in order to build your way back to an effective level of trust, potential creditors will regard any bankruptcy as the worst criterion on any credit report, even additionally to a low FICO total score, as well as the credit impact, you might genuinely be forced to forfeit real assets such as high-priced jewellery, a boat and other items depending on when they were acquired, most states offer an exception for the principal residence and your vehicle, nonetheless if you have secondary property, this might not be protected.

In conclusion, the bankruptcy action itself is not without cost the courts always have required charges and should you need to use an attorney this too will most likely cost you, which can add the last straw to an already very poor financial problem.

On a positive note, you will acquire relief from debt collection efforts, provided they obtain notification, your income can not be garnished and any foreclosure proceedings may be stopped, by participating in proceedings sooner rather than later, you may start to build a new credit history this more often than not better than the past one. Since you will not have access to new credit cards, this can genuinely be an advantage, there are some people who simply shouldn't have access to simple credit, until and unless he or she may find a method to change their habits.

It can serve as a huge wakeup call to adjust any bad money management habits, for a good number of people, it is essential to hit rock bottom before they find the inner strength to make large, positive, long-tem changes.

Bankruptcy
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