Why should I NOT declare bankruptcy?

Question

I'm $100,000s in debt, mostly due to a job loss due to a medical condition and the associated medical bills. I got a huge tax refund and used it all to pay off my debt, increasing my credit score from 530 to 610. I've tried really hard to get a job, but I have got no offers. So I can't pay my bills again and my score dropped back down to 570. Equifax's credit simulator says that if I declare bankruptcy my score will drop to about 450.

Why should I not just wipe out the debt and start over? What do I gain by trying to do the right thing and pay my debt off? They keep wanting more, more, more, even though I don't have it. If I don't declare bankruptcy, when I do get a job they will just garnish my wages.

So, why should I NOT declare bankruptcy and just start over with a clean slate? My credit is already horrible, this will get it over with in 8 years. (my credit score before I got sick was 787).

Answer 1

BK is on your record for ten years.  Even if you get back on your feet and raise your credit score:

You  will not be able to secure a loan to get a car.

You will be denied renter's insurance, or have to pay huge premiums.  

You won't be able to get a mortgage.  

Many jobs will not hire you with a bk on your record.

If you are even able to get a credit card, you'll have exorbitantly high interest.

Answer 2

Talk to an Attorney, BR does stay on your credit report for 10 years,and it can effect your ability to get a job where you would be responsible for handeling money.

IT can make it hard for you to get certain kinds of credit for awhile, I filed in 2002 and I haven't had a problem, but I already owned a home and car and kept them and wiped out everything else.

Once you file all the creditors stop hounding you! It was the best decision I ever made, I now stay away from Credit.

READ DAVE RAMSEY's book...

Answer 3

why you declare bankruptcy it some times does not clear all of your debt away and you still left to pay something. try talking to a financial consultant to see what you can do in this situation.

http://www.jackfinancialconsultantlist.c...

Answer 4

Let me give you the same advice I give to anyone asking this question.  

Pretend you live in Oz....where all creditors are good and sweet and willing to work with you.  They all agree to waive any future interest and late fees....and reduce your debt by 30%.  So you now owe $70,000.  

Then you sit down and make a very strict budget....no more entertainment or dining out....no more Starbucks.  You cancel your cable tv ad cell phones, scrimp like crazy on utilities, and learn to use coupons at the store.

After doing all this, can you come up with $1200 a month over the next 5 years?  

Without a job....probably not.

OK, now wake up from you dream.  These creditors are not going to waive anything, and you might get a few to cut 30% off your debt.  And it's extremely unlikely they will agree to wait 5 years for you to pay them back.

I the next few months you are going to be bombarded by harassing collectors, lawsuits, and threats of property seizures and bank account garnishments.

Or you file for bankruptcy.  

You don't have a job, so I'm going to bet you qualify for Chapter 7.  Hopefully, after all of the unsecured debts are erased you will have some funds left over to pay your mortgage and/or car payments.  If not, you will probably lose them...but you are already on the verge of losing them anyway.

Yes, your credit will be in the toilet for a few years.  But if you educate yourself on how to restore your credit, and visit sites like http://www.lifeafterbakruptcy.com you will be in decent shape in a few years.  

Bankruptcy is not easy, but it's certainly better then dealing with creditors threats for the next several years.

Answer 5

Wait until you have a job to pay your bills first.  If you do not then you may just return to the same state you are in now.  You must learn to quit financing anything.  The money you pay in interest could buy you a lot more.  I know you said a lot was medical bills.  Find a small job if you have to because it will show that you are working to the bigger places.

rd

Answer 6

You need to contact an attorney and talk to them about this.  Even if you do declare bankruptcy you can reaffirm on loans like a home or car if you don't want to lose them.  You would still have to pay for them like you do now, but at least the unsecured debt (medical, credit cards) would be out of the way and you would have travel and a roof to help you start over.  You may also consider Chapter 13 where you settle with your creditors and pay back a percentage of what you owe.  I'm not sure if it helps your credit, but maybe you would be better off with a low credit score then you wouldn't get credit card offers and wouldn't get back in bad shape again.