Should I File Bankruptcy?
Filing bankruptcy is a serious matter. It will affect you for at least seven years, if not longer since it does affect your credit report and credit score. It can limit your options when it comes time to purchase a home. It is also an emotionally draining process. If you are considering bankruptcy you should carefully consider all of your options before you do this.
Some people find it helpful to file a bankruptcy case anyway because their financial situation is causing them emotional distress or depression, or because they would like to free themselves of debt now, if legally allowed, and have their income and assets to themselves in the future. Also, some people may find that a bankruptcy is worth filing even if they do lose some of their assets.
So the question that arises is: Should I file bankruptcy? There are a few things you should research prior to deciding to file for bankruptcy. The first thing to look at is many alternatives to filing for bankruptcy. Some long-time homeowners who have substantial equity in their homes choose to take out a low interest-rate home equity loan to consolidate all of their debt. Since the repayment term is typically 10 or more years on a home equity loan, and the interest rates are usually considerably lower than unsecured debt, the monthly payment on a home equity loan could be significantly less than the combined monthly payments on all of your debt prior to consolidation. This is only one alternative to bankruptcy, there are others and all should be researched to see if they would be more beneficial to you than filing for bankruptcy.
Another important thing to research prior to filing for bankruptcy is how the bankruptcy is going to affect your life. Naturally the bankruptcy will have an impact on your credit score but typically the higher your credit rating is going into a bankruptcy, the higher it is at the culmination of the bankruptcy process. Many things in life rely on your credit rating from housing to insurance. Considering your future, life after bankruptcy, will help you decide if filing for bankruptcy is the best choice given your circumstances.
Before making any decisions on bankruptcy, debtors might want to consult a credit counselor and/or try to negotiate with creditors to see if they can work out a payment plan. Speaking with legal counsel may also make sense. After all, every individual’s situation is unique, and what might be right for one person may not be right for another. The bottom line is this: the decision to file for bankruptcy is not an easy one, so weigh the pros and cons carefully before signing on the dotted line.
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