Should I file bankruptcy?
A person should file a bankruptcy if, and only if, he or she can’t pay bills as they come due or is about to lose property or have property attached by the Court. Very few people lose any property when they file bankruptcy. Filing a bankruptcy is generally better than having a foreclosure on your credit record. A person will often be able to rebuild credit and buy a house within 2 years after a bankruptcy. A repossession can do more damage to your credit, and it may take much, much longer to recover. Government regulations may forever keep you from financing a home with the VA or FHA if you have a repossession for a home, but allows financing 2 years after bankruptcy. Only 7 magical items may not be bankrupted: Child Support and Alimony; taxes less than 3 years old; federally guaranteed student loans; debts due to fraud; debts due to drunk driving; debts due to intentional injuries; and criminal restitution. There are many exceptions to even these. A driver’s license can be reinstated
There’s no magic formula for deciding when bankruptcy is the right choice. It’s an option you might consider if you: • Are paying only minimum amounts on your bills • Can’t budget yourself out of debt within five years • Are getting notices that your mortgage or loans are being foreclosed • Have had a severe financial setback, such as losing your job or a major client, a divorce or a costly illness • What are the alternatives to Bankruptcy? Alternatives to bankruptcy include: • Trying to negotiate with creditors to reduce monthly payments or to skip some payments. • Getting help from a nonprofit credit counseling group. • What are the Consequences of filing Bankruptcy? A debtor may not be fired from a job because of filing for bankruptcy. However, creditors may take a past bankruptcy into consideration when deciding whether to extend credit. Many creditors regard a person who has filed for bankruptcy to be a higher credit risk and may either refuse to extend credit or only extend credi
