Can someone tell me the consequences of going bankrupt?

Question

I'm in too much debt and unable to pay it all and can only see the way forward is bankruptcy, not sure on how to do it and i dont no the full consequences of doing this. can anyone help?

Answer 1

First, if you are sure you are going forward with bankruptcy, you should get a good lawyer - bankruptcy rules were changed in the last few years to make it harder to file and a false move might disqualify you.

Second, the bankruptcy will remain in your credit report for up to 10 years, making it harder to get credit in the future.  Where you will be able to get credit, the lender will most likely charge you much higher interest, making  large purchases much harder to pay off.  Also, some debts may not be subject to bankruptcy (for example, student loans) and you may still have the even after bankruptcy.

Also, under a Chapter 7 bankruptcy, you may lose some assets (the trustee will sell them off) to pay off creditors.  There are some conditions and avenues you can take to avoid this on some assets, but it involves re-affirming debts (meaning you will still owe on these assets).  Chapter 13 bankruptcy saves your assets but does not discharge debts.  this is why you need a good lawyer.

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Answer 2

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Answer 3

You will have a terrible credit rating for seven to fourteen years. That means that it will be harder for you to get a loan for a house or car, etc. etc. Only you can decide if this is best for you. I would contact a lawyer who specializes in bankruptcy, and they can help you with the facts.

Good luck.  

Answer 4

The biggest consequence that people talk about is it stays on your credit report for 7-10 years.  That lowers your credit score, and your credit score is what banks/lenders use to determine if you are a risk for a loan or not.  Also, if your credit score is low, due to the bankruptcy, and you do get approved for a loan, your interest rate will be higher then those that have good credit.  Some insurance companies are also checking credit reports, so you may end up paying a higher price for auto or home owners insurance.   Also, all charge card accounts you file on will have to be closed out.   At your bankruptcy hearing the companies you are filing against do have the right to show up and take belongings back or request a percentage of payment. (I have never heard of this actually happening to anyone, and I've known 5 people that have filed bankruptcy.  Maybe it happens to those that have $$$$ they are filing on)  Big ticket items such as house and car are on a case to case basis, you would need to speak to a bankruptcy attorney to see where you would stand with this (most 1st appointments are free)

The new laws around bankruptcy are suppose to be more stringent.. but I haven't seen any big changes.  They also state you have to attend budgeting classes before and after you file. (either in person or on the net)  



Dependent on how high your debt is (and if you are currently employed) would be how I would decide if I wanted to file or not (my personal opinion) .. if you are over $20,00 in debt, I would file.  Under that (and employed) I would look for a consumer counseling service (United Way used to have this service for free ).

Typically the consumer counseling service will ask you to bring all your bills in and they will contact those you owe. They will work out lower payments and most of the time can stop additional interest building up on your debts.  They will tell you how much money you will need to bring to them once a month.  They will then send that money out to your creditors.  ÃƒÂ¢Ã‚€Â“ You will also need to close down your charge cards that have the debts on them.

Hope this helps you

Good Luck

Answer 5

To qualify for Chapter 7, you have to pass a "means" test, which roughly means that your income must be below the average for your state. Most BK attorneys offer free consultations, so you can find out that way if you qualify to file. You can only file for Chapter 7 once every eight years....so make sure that you are really in a true financial emergency before you file....because if you find yourself in a worse financial situation a few years after filing for Chapter 7, you will not be discharging your debt with Chapter 7 again.

Filing for Chapter 7 does not mean that you’ll have bad credit forever. You will have bad credit for at least two years as your credit score is most heavily weighted on what has occurred in the past 24 months...After that time, you should start to see your score go up...granted that you stay out of trouble.

If you do file for Chapter 7, make darn sure that you and all your dependents have comprehensive health insurance.....An expensive medical emergency after filing for Chapter 7 when you don't have health insurance would be a disaster...and the resulting medical debt could dwarf the original debt....I.E....An emergency appendectomy with just one night in the hospital could be $25,000....

Lastly, the decision to file or not to file should be based only on the facts. Do NOT let anyone try to guilt-trip you for filing for BK if this is in your best interest. Corporate America uses BK all the time and no one shames them....They base their decision to file on the facts....not emotions....You should do the same when considering to file or not to file....Good luck!

Answer 6

http://en.wikipedia.org/wiki/Bankruptcy

It makes you look terrible, and you cna't get a good loan on ANYTHING for seven years.  Plus, the banks could take some of your stuff, like if you have two vehicles, they'll take one, ect.  Plus, you bank ccount goes to checks, which means you can't have a checking account until it's cleared.

might I suggest InCharge to you.

http://www.incharge.org/

My fella went through them and he;s almost payed off his debt in three years.

Answer 7

understand that it will cost you about 1000 to file for bankrupt court...this is an idea call up your creditors and cut deals to settle in full for the amount of cash on hand..if they agree get it in writing to show that thedebt is settled in full...keep that for life

Answer 8

Your credit will be doing 10 years of hard time for the filing.

The longer you are post-bankrupt is the less it will hurt.

For the first 2-3 years you'll want to keep a very low profile.

Use this time to re-build/establish your credit. You'll likely have to do this by secured loans/credit card.

If you have any assets such as home or vehicle, make good on the payments so you don't lose it.

Don't apply for any credit at all for the next year.

Answer 9

Bankruptcy is not the end of the world.

I went through it back in 2001 and I admit I was lucky I had a loan with Ford that I reaffirmed on and made sure they continued to report to the credit bureaus.

You can keep your vehicles and your home and most all of your personal items.

After my discharge I used 2 credit cards for every day things and paid them off in full every month within 1 year I bought a new car with no money down at 3.9 percent interest. After another year of diligently paying my bills on time I bought a new home again with no money down and a 6.5 percent fixed rate.

Today all of my scores are well over 750 and I can get any type of loan or credit I need at the very best rates even though the BK still shows on my credit reports.