What To Consider Before You File Personal Bankruptcy

2007-03-08 10:33:40

( Financial )



Filing bankruptcy should be your last option if you have trouble repaying your debts. Other options should be considered before you file personal bankruptcy. Selling your properties, and other assets to repay your debts is one alternative. If you are filing bankruptcy because you cannot repay a student loan, you can request for hardship forbearance. A debt consolidation loan is another alternative, which consolidates multiple loans into one loan. Debt consolidation loans provide you a lower interest rate and longer repayment schedule. If the reason for filing bankruptcy is unemployment, a deferment can be obtained. Your pension funds can also be utilized to take out a loan from the funds you saved.

A negative record appears on your credit history when you file personal bankruptcy. This record will stay in your credit history for years to come, and will only be disregarded after a certain time frame. This affects most of your future mortgage, student, credit card and other loan applications. Loan approvals will be hard to obtain, and if obtained, higher interest rates are offered.

With a negative credit history, applying for a job sometimes becomes a problem because some companies refuse to hire people with lack of self discipline.

Not all debts are pardoned when you file personal bankruptcy. Child support, alimony, student loans and back taxes remain your responsibility.

Your credit card accounts that have payment balances still due will be cancelled when you file personal bankruptcy. This means you will no longer be allowed to use these cancelled cards again. The bankruptcy court will however allow you to retain your credit card accounts that were completely settled before you filed bankruptcy.

If you are still decided on filing bankruptcy you should approach a bankruptcy lawyer. A bankruptcy lawyer will also discuss the different types of bankruptcies available, and recommend the best option.


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