Is Bankruptcy Right For You?
Many people who have an incredible amount of debt and bad credit are so weighted down by the demand of it. It seems like an endless line of paying creditors with no way out. Which is why some people choose to take the route of bankruptcy, but is it right for everyone?
Negative information stays on your credit report for 7 years, except for bankruptcy, which will stay on your report for ten years. While you may be trying to do everything possible to avoid ruining your credit record, there are some instances, such as job loss or illness, that force consumers into seeking protection from creditors.
Most often, you don’t have to file unless it’s necessary, declaring yourself bankrupt is not an alternative, it’s a necessary solution. One bankruptcy attorney in Chicago claims that he has yet to see a situation where the filing was not required. If you are having difficulty meeting your rent or mortgage payments, you’re completely extended beyond your credit limit, the collection agencies are uncooperative and you need more than a credit counselor, you may need to file for protection.
Bankruptcy stays on your credit report for ten years, making it difficult to reestablish your credit. However, for those folks who have filed for bankruptcy, a secured credit card may help you rebuild your history. There are two basic ways of filing for personal bankruptcy. “Chapter 7″ gets rid of all debts (except some taxes and maybe alimony payments); “Chapter 13″ allows you, when in debt and with a steady income, to pay off your bills over a 36-to-60-month period.
Seek the advice of an attorney who will guide you into which bankruptcy proceeding you should file, according to your personal debt situation. When you file either Chapter 7 or Chapter 13, you are issued a restraining order by the court which will protect you from all further proceedings against you until all previous debts are cleared. The restraining order includes protection against wage garnishing, creditor harassment and foreclosures without a court order.
On the one hand filing for bankruptcy gives you the immediate relief that you are looking for. Unfortunately it will stay on your credit for ten years, which can hurt you from making any big purchases that you may be able to obtain later in life.