Is filing bankruptcy worth it in the long run?
Would it be more beneficial to file for bankruptcy if you’re in over your head and owe a good chunk of change or stick it out and in time and years get things paid off little by little. Which looks better when applying for life items such as Cars, houses, etc.
And in the long run, which will a company trying to finance you see as the better option?
I guess I’m looking for pros and cons for both options.
Thanks!
Thanks, yeah still in the early 20’s.
Filing for bankruptcy is know for leaving a huge stain on ones credit report and for somehow ridding one of ones debts. But believing that that is all it does, is ridiculous. There are many other aspects of bankruptcy filing, both positive and negative, which are not discussed often, and that is exactly what we are going to do here.
Advantages Of Going Bankrupt
This financial procedure offers many positive things, I will list them one by one.
1) So you are deep in debt and you are unable to pay it off. You have many options if this is your case. If you decide to file for bankruptcy, you will be paying less money than if you went for an informal voluntary agreement. Both carry different pros and cons, but this is something important to bear in mind.
2) Creditors can become an extreme hassle and put an enormous amount of pressure on you. Bankruptcy will put an end to their incessant harassment.
3) Another great thing of bankruptcy filing is that a third party (usually professionals in the administration ground) takes over your debt negotiations and payments. You will not be making any decisions on that field anymore.
4) You will get a fresh financial start, which is invaluable.
5) Those filing for Chapter 7, will be discharged from most of their unsecured debts.
6) After the bankruptcy is finally discharged, your debts will no longer be on your credit report. You will be able to begin rebuilding your credit and will even be able to apply for loans.
Disadvantages Of Bankruptcy
Like any typical financial move, it does have negative things. Whether they are significant for you or not, depends on your particular situation.
1) In case you are a homeowner and you have some equity on your home, it will most likely be sold.
2) All of your financial affairs will be investigated whether you allow it or not. Provided that any irregularities are found, you may face criminal charges.
3) If you have a business, or part of a business (partnership), it may be sold.
4) You may lose most of your high valuable assets. Not all of them, of course, the law protects certain types of assets from being taken.
5) You will have to wait until your bankruptcy is discharged to apply for a loan.
6) Going bankrupt can be expensive at time as all of the fees will be taken from your assets.
7) Some debts cannot be written off, for instance: child support, student loans, court order debts, fines, etc.
As you can see, there are both advantages and disadvantages of filing for bankruptcy. Whether it will be beneficial for you to file or not, depends on your particular situation.
June 14th, 2010 at 10:41 pmIt depends. If you’re young and will be looking to make some major purchases in the next 10 years which you’ll need credit for, it may be best to try not to declare since it will stay on your credit report for about that long (sometimes even longer).
If you’re old and aren’t likely to make many credit purchases in the near future, declare if you’re in way over your head.
The upside is that you’ll be able to escape much of your debt. However, certain types of debts (including taxes, child support, student loans, criminal fines, for example) are not dischargeable in a bankruptcy. So if a lot of your debt involves these kinds of items, you may want to reconsider filing.
The downside is difficulty getting credit. Also, many jobs also ask for your permission to view your credit report before they hire you. A bankruptcy on your credit report may make a potential employer think that you’re irresponsible, which is not a good thing.
June 14th, 2010 at 10:41 pm