You may think that your debt situation keeps getting worse
no matter what you try to improve it. You might think you
are running out of options and that declaring bankruptcy
may be your only choice. If this is what you are feeling,
you should wait to consider what the consequences may be.
Filing bankruptcy can leave some very adverse effects on
your credit and your ability to obtain financial assistance
if you need it.
The expert advice of financial advisers is that bankruptcy
should not be used unless it is absolutely necessary.
Lawyers that deal with these situations also agree that
this is true. If you have a huge amount of high interest
credit card debt and can't make your mortgage payments or
if your car is about to be repossessed or the electricity
is going to be disconnected, and you can't pay any of these
bills, you may want to consider bankruptcy.
If these extreme measures must be made to resolve your
debt, you need to seriously examine your finances and find
how you ended up in this massive debt.
For most consumers the problem is mismanagement of
finances. They are spending far beyond their means to pay
and failing to pay bills on time and this leads to late
fees and troubles with creditors. Debt can also be the
result of unforeseen things in life, such as the loss of
employment or illness which leads to high medical bills.
The unexpected loss of a loved one can send our finances
into a downward spiral that is hard to recover from. These
types of circumstances are the more common ones associated
with bankruptcy.
Some people seem to think that bankruptcy is a perfect
solution to all of life's problems. They think that
bankruptcy can be used to take away all the debt with no
lasting consequences. The bankruptcy laws have been
changed to cut down on the people who thought they could
wipe out their debt so it is not so easy to qualify for
bankruptcy. You have to pass a strict application process
and then you have to wait for the judge's decree to give
you the debt relief you requested.
A consequence of declaring bankruptcy is that your credit
rating will be adversely affected for as long as ten years
in most cases. This can be a detriment to you if you want
to seek financing on loans at a later time. Lenders will
certainly use your credit history to help them determine if
you are a suitable loan candidate. Your credit score is
very influential when you want to buy a new car or finance
a mortgage.
You need to do a lot of research on the options available
to you if you believe that the only one is bankruptcy.
Financial advisors and bankruptcy lawyers can recommend the
best thing for you in your particular circumstances. Try
to locate someone who has gone through it and ask him or
her about his or her experiences with bankruptcy. Don't
make a hasty decision about this drastic move while there
may be more acceptable ways to alleviate your debt.
----------------------------------------------------
Alisdair Fawcett has been writing on personal finance
topics for many years and you can find more of his debt
related articles at the debt help and consolidation sites,
http://www.tfgi.com and
http://www.rebuild.org/debt-consolidation.html
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