Each and every year millions of people in the US and throughout the world find themselves in serious financial trouble. Some of these people are fortunate enough to emerge from their debt problems by enacting a budget or simply by speaking to a financial advisor and putting a plan into action. Still, others are not so fortunate and many must take stronger action to see their debt situation improve. Among the many different paths that debtors can take, the personal bankruptcy process is one of the most popular. For many, claiming bankruptcy under Chapter 7 can be a quick way to eliminate large portions of debt, but is it worth it?
While it might seem like bankruptcy is a simple solution to your debt problems, some of the consequences that come along with filing might have you thinking twice. Consider the following before you decide to go bankrupt –
• Bankruptcy will tarnish your credit rating – okay, perhaps “tarnish” is putting it too nicely. Filing a personal bankruptcy claim will completely decimate your credit for up to 10 years, making it nearly impossible to secure any type of personal financing. While there are loans for bankrupts, such loans typically carry high interest rates and harsh terms.
• Bankruptcy costs money – many would-be filers are surprised to learn that filing a claim can actually cost quite a bit of money. Even if you choose not to hire an attorney, which can set you back around $1,000, you must still pay a mandatory filing fee of $200.
• Bankruptcy is time consuming – before you can file a claim you must collect and submit personal information relating to your debts, assets and liabilities. It’s important to take the time to ensure that this information is correct.
Don’t get me wrong – bankruptcy can be a valid option for some, though it’s important to consider the potential ramifications of filing before moving full steam ahead.