Everyone’s Situation is Different
Some people have the misconception that bankruptcy is always bad. Many Americans who have not faced serious personal debt have the impression that debts come from irresponsible behavior. But the reality is that many people facing insurmountable debt are put in that situation due to circumstances outside of their control. Personal bankruptcy was designed to help individuals and families get out from under debts that they could not otherwise handle. Read on to learn the benefits and consequences of bankruptcy.
Causes of Bankruptcy
The time to file bankruptcy is when you cannot afford to pay your debts. Sometimes we see consumers who are trying to use bankruptcy to get out of paying debts when they don’t truly need to. This type of behavior can be considered fraud, or at least dishonest, and is not the intention of the bankruptcy code. Bankruptcy is intended to help your family recover from several financial trouble.
Common causes of this kind of debt include the loss of a job, medical debt, car accidents, divorce or other personal hardships. These situations often catch us by surprise – even if we responsibly prepare for the worst, sometimes we may find ourselves in an impossible situation. Bankruptcy gives you a real opportunity to resolve these situations and give your family a fresh start.
What are the Consequences of Bankruptcy?
Bankruptcy certainly does have its downsides. It means you will discharge many of your personal debts, and leave them unpaid. This has a negative effect on your credit score, and your bankruptcy will appear as a public record for 10 years after yo file. However, it is worth noting, that if you are struggling to pay your bills and will not be able to pay them in the future, your credit score is already suffering great damage.
You may have difficulty securing a loan or getting a credit card in the years after bankruptcy. Some landlord may also refuse to lease you a property after bankruptcy, or demand a higher security deposit. There are also certain jobs in which a potential employer may run a credit check as part of your interview process.
Many of us also feel a strong moral obligation connected to our debts. You can decide personally how to handle your debts after you file bankruptcy if you wish. If you feel a moral obligation to repay a loan, there’s nothing to say you can’t uphold that moral obligation even after you no longer have a legal obligation.
Filing Bankruptcy – Is it a Good Idea?
If you are honestly facing debts that you have no means to repay, and your family is suffering, bankruptcy was designed specifically for your situation. Your personal situation will determine whether you qualify to file for bankruptcy, and whether it is a good fit for you. A good place to start is speaking to a local attorney for a free consultation. Laws vary by state, and your personal debts may be treated differently. A meeting with a local attorney may be the first step to helping your family get a fresh start.