Considering Filing for Bankruptcy?

Bankruptcy carries a bad reputation and it’s no wonder. Once you file for bankruptcy your credit is negatively affected. The chances of obtaining new credit for a loan or credit card are slim to none. While it’s true bankruptcy will be removed from your report in 7 years (or sometimes as many as 10 years) many creditors do ask if you have ever filed for bankruptcy and by law you are required to tell the truth no matter how long ago it was.

If you can somehow repay your debt without turning to bankruptcy you should. In addition to impacting your credit, bankruptcy can even impact your emotional health. Many filers feel regretful and embarrassed long after they’ve declared bankruptcy. So before you make the decision to file, consider some alternatives first.

Often creditors will be happy to negotiate a reduced payment or debt settlement with a customer considering bankruptcy. Even if you’re several months late this can still be achieved.

Another thing that can help you is consumer credit counseling. These agencies evaluate your debt situation and negotiate with your creditors on your behalf. You pay the credit counseling agency a lump sum every month rather than sending payments to all your creditors.

In some cases, bankruptcy is the best solution. For example, if you are so late on a payment that your wages are garnished, filing for bankruptcy may cease the garnishment. Another situation where bankruptcy may be appropriate is with high medical bills not covered under an insurance plan. If you are in dire financial straits bankruptcy may be your last resort and prevent court judgments.

Because every financial situation is different, what works for one person may not work for another. The information in this article is not legal advice, so if you’re considering bankruptcy you need to consult with an attorney. You may want to consult with more than one attorney before deciding who you want to use, especially if the initial consultations are offered free.

The right attorney will explain the bankruptcy process in detail, answer any questions you may have and give you honest advice about whether filing bankruptcy is recommended for your situation. It is important to weigh all the pros and cons of this decision as it is one that will affect your credit for years to come.