Personal Bankruptcy Realities - Part 2
The Scary StuffIt's important to know the pitfalls. Knowledge is power, and you can't make an informed decision or plan an effective strategy without it.
Here are some cold, hard facts about bankruptcy:
It's going to stay on your credit report for 7 to 10 years, which could be disastrous for your future attempts to obtain credit.
This kind of legal procedure becomes public record, as will your name and personal information.
Your debt may be discharged, but any unpaid income tax that's over three years old won't be. The same applies to your student loans. Unless you get onboard a federal loan forgiveness program, you'll be paying any student loans back in full.
The filing won’t be cheap! It might seem odd since you're filing because you can't afford to pay your bills, but both Chapter 7 and Chapter 13 require expensive legal representation.
Are you looking for a home loan? Well, good luck with that. Banks are worried about lending money to anyone who has filed for bankruptcy. If you do manage to get a mortgage, the interest will be more than double the norm.
Getting a credit card will be easier than getting a mortgage, but you'll most likely be looking at higher interest rates.
Remember that Chapter 13 payment plan? Don't miss a payment; it could be devastating. The trustee can do one of two things if you fail to make payments: convert your Chapter 13 to a Chapter 7 and liquidate your assets, or completely dismiss your case!
About those non-exempt assets -- bank accounts, second vehicles, investments, and family heirlooms are all up for grabs. If you've got an antique table from your Great Grandmother, the next time you see it might be on The Antiques Road Show, where it's up for auction.
Final WordYou should not take the prospect of personal bankruptcy lightly. The points listed above are not intended to scare you off, but to educate you about realities most people either don't know or don't want to tell you. The laws that govern filing are quite complex. If this is a step that you are seriously considering, it’s highly advisable to talk to an attorney. Not only will this action ensure that you file all your paperwork properly, but it's also the best way to be successful in your quest to get out of debt.
Remember: knowledge is power. You can't make a viable strategy if you’re in the dark about the details, and unfortunately, bankruptcy happens to be shrouded in secrecy and taboo. That’s why you need to empower yourself by doing your research and thinking carefully about your situation. People have emerged successfully from this process in thousands of cases, but these people understood the benefits and risks and made informed decisions based on that knowledge. The key to joining their ranks is in making intelligent decisions.