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Weighing the impact of bankruptcy on your life: An overview

Tweet Are you contemplating filing bankruptcy to discharge your unsecured debts? If so, you need to acquire information on positive as well as negative side effects of bankruptcy, before filing petition with the court. Filing bankruptcy is considered to be an important financial step and it can affect different aspect of your life. Well, you...


Are you contemplating filing bankruptcy to discharge your unsecured debts? If so, you need to acquire information on positive as well as negative side effects of bankruptcy, before filing petition with the court. Filing bankruptcy is considered to be an important financial step and it can affect different aspect of your life. Well, you need to consult an insolvancy attorney to find potential side effects that can affect your life. Before you decide to file bankruptcy, you need to be aware of the drawbacks of filing bankruptcy.

 

As a matter of fact, you may get significant relief from financial stress whether you file under Chapter 7 or 13 Bankruptcy. After filing, the impact can be severe on your life. Here are some of the drawbacks that you need to know liquidation.

 

  • Temporarily low credit score: When you file bankruptcy, it may show on your credit report for 7 to 10 years. Thereby, blemishing the credit report to a great extent. However, in due course of time, the effect of bankruptcy on your credit report diminishes. During this phase, if you responsibly manage your financial state, it can help to repair your credit.

 

  • High risk borrower: After filing bankruptcy, your potential lenders may consider your high risk borrower. Therefore, you may not get approval on your loan application. However, there are some lenders who offer loan to high risk borrowers. But you may not get this loan on favorable term immediately following bankruptcy.

 

  • Possible loss of property: There is a chance of losing some of your properties to  the bankruptcy attorney. However, if you can successfully exempt all of your your property, the trustee may not be able to sell them. In case, you fail to get exemption, the court appointed trustee may sell the property and the proceeds may get distributed among the creditors.

 

However, you need to aware of the positive sides of filing bankruptcy along with its negative aspects. The US court has designed the bankruptcy program for the indebted consumers to lower their debt burden. Here are some of the positive impact on your credit after filing bankruptcy.

 

  • Avoid creditor harassment: Once you file bankruptcy, the court places automatic stay, preventing the creditors from any collection attempt. Therefore, the creditors may not be able to contact you after filing bankruptcy. Well, you may not have to deal with threatening calls of repossession, foreclosure or garnishment.

 

  • A new beginning of your financial life: If you’re keen to start afresh, then filing bankruptcy can be a beneficial option. You can start working on rebuilding your finance if your bankruptcy case proceeds smoothly. People who’re financially strapped can rely on filing bankruptcy to start their financial life afresh.

 

  • Start rebuilding your credit rating: After discharging your debts in bankruptcy, you may get ample amount of time to repair your credit. You may not be bothered by the collection calls, so you can work on rebuilding your credit.

 

Therefore, you need to consider the negative as well as positive points when you plan to file bankruptcy. You need to evaluate your situation in order to know whether filing bankruptcy is beneficial for your financial state.

 

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