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Long Term Effects
Keep in mind, bankruptcy doesn't come without some trade offs. Often times, you see advertisements promoting bankruptcy as "fast and easy", but that generally applies to the lawyer who files on your behalf, not you. Your lawyer isn't the one who has to live with the stigma of filing for up to 7-10 years.
Filing puts the world on
notice about your personal
financial affairs. Since
its a civil court
proceeding, it becomes a
matter of public record.
In some cases, (chapter
13) even your employer can
be involved because this
chapter requires
deductions from you
paycheck.
Bankruptcy also stays on
your credit rport for up
to 10 years and can hinder
your ability to get a job,
establish new credit, get
insurance and even a place
to live. You will also
have to pay court,
attorney and filing fees
up front. Furthermore, you
will lose control over
your finances since a
Trustee will be appointed
to oversee the completion
of your filing. Trustees
don't come cheap either.
They charge an average of
8% to oversee the
successful discharge of
your bankruptcy petition.
(Example:
$25,000 (total debt) x .08
(Trustee Fee) = $2,000
plus attorney, court and
filing fees)
This in addition to the
fact that filing doesn't
necessarily get you out of
all your obligations,
bankruptcy may not be that
end-all solution that its
portrayed to be.
Other
Alternatives
* You can
simply walk away? If you
have no assets, creditor
can't attach any property.
Unless a creditor has a
substantial amount
invested in you and/or
your state prohibits
garnishment of wages, you
probably don't have
anything to worry about.
However, you should be
prepared for collection
attempts via phone and
mail, and threats of
lawsuits if you decide to
go this route. This is not
a recommended way to deal
with your obligations.
* You can
try to deal with the
creditors yourself and
work out a new payment
plan.
* You can
try to budget your
expenses and live a more
frugal lifestyle, or take
on a second job to bring
in more income.
* You can
contact one of the many
debt consolidation /
credit counseling services
that specialize in helping
consumer with credit
problems.
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