You look down at your bill pile and then at your checkbook and things just do not seem to mesh.
You have more going out than you have coming in, and you have not even accounted for everyday living expenses like gas and groceries.
Unfortunately, there may be no other alternative than to file for bankruptcy.
If this is your last option, what are the benefits?
For many, the most important benefit of filing for bankruptcy is the fact that creditors, save government owed debt, can no longer contact you. As soon as you retain an attorney, they take care of handling all of that for you.
You can also contact the appropriate government agencies and let them know you are going through the bankruptcy, and they may allow you to negotiate more favorable terms for paying back the debt you still owe them.
Another benefit is that if the bankruptcy goes through, all of your debt will be dismissed (with the exception of money owed to the government, such as taxes and student loans).
You will no longer have any credit card debt, loan debt, etc… This means you will finally be able to restructure your finances and get a fresh start.
However, there is a price to all of this freedom…
Once the bankruptcy goes through, it along with all of the dismissed credit will be on your report for between seven to ten years.
Your credit rating will immediately go into the “high risk” zone and it will be all but impossible to get any credit cards or loans with a decent interest rate.
The upside to this is that you will receive offers for bad credit credit cards to rebuild your credit.
Filing for bankruptcy is obviously a major decision and one that should not be taken lightly. However, if your cash going out has started to exceed your incoming cash, there may be no other options.
If this is the case, use the dismissal of the debt wisely and start to save money so you never run into this situation again.
If you spend wisely and set up a proper budget, you will come out of the seven to ten year period in excellent financial shape.
An introduction to bankruptcy video