what are the downsides of bankruptcy?

Answer 1

it can effect a lot of things from getting a job, getting a loan, mortagage, a credit card, an apartment .. you have to wait at least 2 years before you can apply for things but you should try and get a secured credit card to help repair the damage of the bankruptcy ...

Answer 2

1. If you file for bankruptcy, it will remain on your credit history for the next 7 to 10 years.

2. With the bankruptcy on your credit history, credit card companies will refuse to open new accounts for you, or only offer you low-limit, secured cards, where you need to have $500 to $1000 in a savings account set aside to be eligible for the card.

3. Any credit cards or loans taken out after the bankruptcy will have much higher interest rates, because you will be seen as a risk. Insurance companies and landlords may also charge you higher rates because you are now a high-risk customer.

4. Employers who review credit histories of job applicants may not offer you a position if you have a recent bankruptcy in your history. Some companies consider people with financial difficulties to be security risks, because they may be more willing to sell company secrets or perform other illegal tasks for cash to pay off debts.

5. Because of new federal laws, many people no longer have the option of filing Chapter 7 bankruptcy, which wipes out debts. Instead, they have to file Chapter 13 bankruptcy, which requires that you repay some of the debt you owe. So if you were hoping to make a clean start, bankruptcy is no longer the easy way out.

Answer 3

Despite some of the answers posted previously, I am an attorney and I can tell you that the downsides of bankruptcy pale in comparison to the downsides of owing debt and not paying creditors.

Bankruptcy can remain on your credit report for up to 10 years, whereas delinquent payments and other negative credit can remain on your report for only 7 years. However, the rule is that it can remain on the report for 7 years "from the date of last activity." Many times creditors sell the collection rights on bad debt to new collectors and I've seen this start the time clock over again because this now becomes "new activity."

Anything that happens regarding your credit is part of your history. Most lenders will tell you that while they certainly don't view bankruptcy as a positive development, they also tell you that they won't loan any money to you unless and until you get out of debt. If you can't afford to pay your bills, how are you going to get out of debt? The answer for many people is to file for bankruptcy. Bankruptcy, therefore, is often the first step in the rebuilding process because it is the step that gets you out of debt. After that, you'll obviously have to start the process of rebuilding.

There are a number of things you can do to begin to recover after bankruptcy. In my experience, secured credit cards, while certainly not a "good deal," can help re-establish a good payment history. A lot of my clients get solicitations from car dealerships after bankruptcy so while the terms of an initial financing arrangement after bankruptcy are not going to be favorable, it is certainly possible to finance the purchase of a vehicle. Most mortgage companies are also open to financing the purchase or refinance of a house within a couple of years of the bankruptcy. By doing these things and making timely payments, you can rebuild your rating much quicker than you could if you are in debt and struggling to make payments. It can take many years or even decades to pay off your debt once you're over your head and sometimes it's just impossible. Even if you manage to pay off the debt (for most of my clients, that's an impossibility anyway), you still have to start rebuilding your score.

Thus, I acknowledge that bankruptcy is certainly not an ideal credit situation. However, the alternative to bankruptcy is typically even worse. If you don't file for bankruptcy and you can't afford to pay your payments, then your credit score is often worse because your debt to income ratio is poor, you have delinquent payments, all of your interest rates on credit cards skyrocket, your wages are subject to garnishment (in most states), you will be sued and have judgments against you, etc...

My advice to those of you who can not afford to pay your creditors as they are due is to talk to a lawyer about bankruptcy. It is a very powerful and perfectly legal and moral thing to do to help you achieve future financial well-being.

Answer 4

Don't let those commercials you hear on the radio mislead you;
Bankruptcy will haunt you forever & ever amen. It should be
a last resort option. Dispite what they say, people remember
that you owe them & didn't pay.... and wonder if your going to do it again.

Bankruprtcy (other than from medical debt) forces you into a
life style change. No more spending. Don't go this route unless
you can make the changes required to keep from going into debt again.

Answer 5

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Answer 6

you still have to pay those bills,regardless if you file or not.