How exactly will you be affected if you decide to file bankruptcy? There are some positive reasons for filing bankruptcy, but there are also some negative effects to filing.
The Positive Effects Of Filing Bankruptcy
The biggest positive effect of filing bankruptcy is debt relief. Debt can be an enormous mental weight to carry around. If you’re in debt, the thoughts of that debt permeate every aspect of your life.
It’s hard to enjoy life if you’re constantly worried whether you can afford to go out to eat with your family, pay for orthodontist appointments, or even purchase gas and food. Bankruptcy can relieve your debt and let you go on living your life again.
Another positive aspect of filing bankruptcy is that your creditors will be prohibited from calling or otherwise harassing you about your debt. Creditors also cannot sue you to collect the debt if you’ve filed bankruptcy.
The Negative Aspects Of Bankruptcy
However, like anything in life, freedom from debt comes with a cost. Bankruptcy carries with it several negative consequences.
After you’ve filed bankruptcy, you cant file again for several years. For example, once you’ve filed a Chapter 7 Bankruptcy then you must wait 8 years before you’re allowed to file again. That means that if you get snowed-under by debt within that time, then you can’t relieve the debt through Chapter 7 Bankruptcy (although Chapter 13 bankruptcy may still be an option).
Secondly, a bankruptcy will severely damage your credit. If you file bankruptcy, you will probably not be able to competitively qualify for loans for a year or more. You may also be unable to apply for a credit card or other lines of credit. You may not be able to buy a home or refinance your home for a year or more. It’s likely that you would be able to purchase a new car, but the interest rate will probably be higher than it would be if you had not filed bankruptcy.
Thirdly, if you file bankruptcy, you may have to disclose the information to a prospective employer. Many employment applications ask if you’ve ever filed bankruptcy. Though an employer can’t fire you for filing bankruptcy, you may not get hired in the private sector if you’ve filed a bankruptcy
Another bankruptcy downside is that a Chapter 7 bankruptcy doesn’t erase all debt. Some debts cannot be erased by bankruptcy, such as alimony, child support, marital debt and more. These debts must still be paid if you file bankruptcy
Lastly, a bankruptcy itself costs money. There are attorney fees, court costs and credit counseling fees which must be paid if you wish to file bankruptcy.
Is Bankruptcy The Right Choice For You?
As you can see, there are quite a few negative effects of filing bankruptcy. If you’re severely encumbered by debt, then you should weigh the positive effects of filing bankruptcy with the negative, and then make the best choice for your situation.
The easiest way to decide whether bankruptcy is the right choice for you is to have your case evaluated by a bankruptcy attorney. A bankruptcy lawyer can answer you bankruptcy questions and discuss your situation with you. The bankruptcy lawyer will be able to advise you whether bankruptcy is the right fit for you.
If you’re looking for a quicker way to have your situation evaluated by an experienced bankruptcy attorney, then fill out our bankruptcy evaluation. Our Cincinnati bankruptcy attorneys will review your situation and let you know whether bankruptcy is the right choice for you.