Bankruptcy sounds like a terrifying word with serious consequences. In reality, filing a Chapter 7 bankruptcy could be the best thing for your future, and may help you to avoid future financial hardships. Bankruptcy should be viewed as a last option, but when it's necessary, it can also be an investment for your future financial comfort. By filing for bankruptcy you may be able to provide for your family long-term in a way you otherwise could not.
One major area that will be affected by your bankruptcy is your credit score. Inevitably, a bankruptcy will send a credit score downward. While the mark on your record is just a number, it can severely affect your purchasing power for the next 7-10 years. You may be denied when you try to buy a new car or take out a loan at the bank. Also, bankruptcy can send interest rates upwards and you may be charged extra fees when taking out a loan. Buying a home or even renting an apartment can be complicated when there's a bankruptcy in your past.
A Chapter 7 may affect your ability to get a job. A lower credit score can turn off potential employers. While there's no need to list your credit score on a resume, many hiring companies will check the interviewees' credit history as a part of the hiring process. This helps employers to choose the most financially diligent people. There are three groups of people who have a legal right to look into your financial history. Along with employers, potential lenders and anyone who cosigns a loan with you will be notified of your bankruptcy. Sometimes it is easy to reason with employers and lenders and explain your situation, while in other cases it is not as simple.
Still, most often people who look at your credit report are interested in your recent spending habits. A bankruptcy that is years old is probably not as big of a concern as the way that you are currently handling your finances. This means that with time, your Chapter 7 bankruptcy will slowly wane in its importance. Also, if you continue to make timely bill payments after your bankruptcy, this may raise your reputation. According to a New York bankruptcy lawyer, if you do not file for bankruptcy, and continue to accumulate debt, this will also send your credit score downward. Chapter 7 bankruptcy can eventually salvage a bad credit score, but resisting this action will be damaging.
Bankruptcy sometimes takes an emotional toll on filers. Individuals who are accustomed to paying their ways through life are in for a rude awakening when they file for bankruptcy. This financial process involves restructuring finances and selling assets to pay for debts, so you may have to live with less until you get back on your feet. Many people who file for bankruptcy can become depressed by their lack of spending money. On the other hand, bankruptcy can alleviate the guilt that comes from angry and insistent creditors. By satisfying your payments, you will be able to avoid collections calls and start moving towards a brighter future.
The American Financial Service says that people who file bankruptcy often suffer through three emotional stages. The first consists of feelings of guilt and failure. While bankruptcy is ultimately a step in the right direction, these people have a hard time coming to grips with the fact that they needed to take this drastic measure. Next, many bankruptcy filers are given a respite from their guilt, and spend some time feeling relieved of their money problems. A little while later, this dissolves into remorse and regret. People have a hard time scaling their budget back and living below their preferred means. If you are prone to depression concerning money issues, and need to file for bankruptcy, remember that this can be an investment for a brighter future. By declaring bankruptcy now, you are helping your family and your bank account, and eliminating calls from creditors that won't follow you into your later life.