Many consumers think bankruptcy is the best option. While it is one way to get rid of debt quickly, it is wise for a person to think about their financial future as a whole. Not only that, but one must understand a few other things when it comes to filing the seemingly never-ending paperwork.
With this in mind, here is what you need to know if you are filing for bankruptcy:
Chapter 7 or 13 – Depending on the financial situation of the consumer, he or she will need to file for chapter 7 or chapter 13 bankruptcy. Now, chapter 7 is better for a person who has a low income and few assets. Of course, the courts will ultimately decide what method a person can use in the end. On the other hand, a consumer with a good job, steady income, and some assets may have to submit to chapter 13 bankruptcy. With this, he or she will have to pay back some of the loans.
Credit score – When looking to borrow money, a consumer will need to show their creditworthiness. This is hard to do immediately after filing for bankruptcy. For this reason, when looking for a potential loan in the future or even opening a new credit card, you may have to wait a year or two. Simply put, after filing, you will have to rely on money in the bank and your monthly income. While this is not a big deal to some, others who want a credit card or auto loan will struggle with this.
Job prospects – While it is not always fair, many employers will look at a person’s financial background when considering hiring them for a new position. When discovering a bankruptcy, a hiring manager will express some concern. While this is true in many cases, it will largely depend on the career field. For example, when trying to work in finance or for the government, bankruptcy may hurt an applicant’s chances at landing a job.
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Not free – It is not cheap or easy to file for bankruptcy. While it is often the best choice for some consumers, one must realize they will still need to hire an attorney (this is highly recommended, but not necessary), fill out the paperwork, and attend a few hearings. Again, while it works for some, it is not an easy process by any means.
When looking to file for bankruptcy, a person should have a solid and serious long-term plan. This is a huge step to take and one must know what it entails and what they will get out of the experience. There are Pros and Cons to filing for bankruptcy. A consumer should check out all of their viable options first, before just taking the leap into bankruptcy.
If you are dealing with debt and would like to know your options, give us a call today! We have over 45 years of experience in helping people get out of debt. Let us help you!
