The decision to file for bankruptcy is a very important decision and one that requires much thought and prayer. In 2005 the bankruptcy laws were dramatically changed which made the impact of bankruptcy much bigger. No longer can you simply walk away from a mountain of debt, dust your hands off and start all over. Each state has different laws and I encourage you to discuss the matter with someone that understands the laws of your state.
If you do decide to file for bankruptcy you need to understand the long-term costs that will be around even after you have paid the lawyer. There are at least three other areas where a bankruptcy will end up costing you.
- In the workplace: In today’s economy, finding a job is no easy task. Filing for bankruptcy will make it even harder. Many employers will toss your application if they know you have filed for bankruptcy. We won’t get into whether or not it is fair, it just is. Also, if you need a security clearance for your chosen profession, a bankruptcy will make it difficult to get certain levels of clearance, and may even cause you to lose a clearance if you have one.
- Trying to purchase a house: If you think it is hard getting a loan today, try getting a loan within seven years of filing for bankruptcy. It may be harder that you think. “No problem, I’ll just rent”. You will find a similar situation trying to rent. The bankruptcy on your credit report will almost guarantee you get turned down.
- Insurance rates: Once again having the bankruptcy on your credit report is almost a guaranteed way to have your rates re-evaluated and very likely raised. Is it fair? Doesn’t matter. It just is.
If you are even thinking about filing for bankruptcy I strongly encourage you to talk to someone that has nothing to gain from your financial situation. That means don’t talk to a bankruptcy lawyer first. Second, really sit down and determine why you are where you are. Some financial situations are caused by conditions outside of our control. Most are because we can’t seem to understand that spending more than we make is a bad idea.
Bankruptcy is a completely legal thing to do, but it should be the last thing you do, not simply a way of cleaning up a mess that you created.
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