The Consequences of Declaring Bankruptcy
The consequences of declaring bankruptcy are a great worry to many people who think they may need to file Chapter 7.
It's true that bankruptcy has long-term ramifications for you and your financial future.
But what exactly are those long-term consequences? Will you lose all of your personal belongings if you decide to file for Chapter 7 bankruptcy? No, you probably will not.
In approximately 95% of bankruptcy cases, the consumer gets to keep personal belongings because they are either exempt are simply not worth the trouble for creditors.
Will you lose your house as a consequence of filing bankruptcy? Most likely, you will not.
This, of course, depends on your state's homestead exemption laws as well as the amount that you owe creditors and the value of your home.
Your lawyer can help you understand the details, but you have a good chance of keeping your house.
What if you do not yet own a home? Will your credit be trashed to the point that you will never be able to buy a house in the future? Your credit rating will soon have a big black mark on it if you file bankruptcy, but this is not the end of the world or of your financial life.
Credit agencies are allowed to report your bankruptcy for up to 10 years in the case of Chapter 7.
If you went with Chapter 13 bankruptcy, then the credit agencies usually remove the bankruptcy from your credit score after seven years as long as you have made your payments as instructed by the court.
An important question you have to ask yourself is what will be the consequences of not declaring bankruptcy.
Make your decisions based on what is best for you and your family, and don't worry about the embarrassment of declaring personal bankruptcy.
If, with your lawyer's help, you decide that bankruptcy is necessary then that is more important than your credit score and similar concerns.
It's true that bankruptcy has long-term ramifications for you and your financial future.
But what exactly are those long-term consequences? Will you lose all of your personal belongings if you decide to file for Chapter 7 bankruptcy? No, you probably will not.
In approximately 95% of bankruptcy cases, the consumer gets to keep personal belongings because they are either exempt are simply not worth the trouble for creditors.
Will you lose your house as a consequence of filing bankruptcy? Most likely, you will not.
This, of course, depends on your state's homestead exemption laws as well as the amount that you owe creditors and the value of your home.
Your lawyer can help you understand the details, but you have a good chance of keeping your house.
What if you do not yet own a home? Will your credit be trashed to the point that you will never be able to buy a house in the future? Your credit rating will soon have a big black mark on it if you file bankruptcy, but this is not the end of the world or of your financial life.
Credit agencies are allowed to report your bankruptcy for up to 10 years in the case of Chapter 7.
If you went with Chapter 13 bankruptcy, then the credit agencies usually remove the bankruptcy from your credit score after seven years as long as you have made your payments as instructed by the court.
An important question you have to ask yourself is what will be the consequences of not declaring bankruptcy.
Make your decisions based on what is best for you and your family, and don't worry about the embarrassment of declaring personal bankruptcy.
If, with your lawyer's help, you decide that bankruptcy is necessary then that is more important than your credit score and similar concerns.