If you are struggling with debts, you have probably considered bankruptcy to some degree. However, most financial experts recommend it as a last resort. It’s best to first exhaust all other debt resolution options, and when you realize, there is nothing else left, file for bankruptcy. This is easier said than done. That’s why you should seek the help of experienced bankruptcy experts like Benenati Law Firm or other law firms that handle bankruptcy-related cases. They can help you carefully consider your options.
Some situations might allow you to delay bankruptcy until you have exhausted all other options. On the other hand, some instances might force you to skip other debt management and resolution options and file for bankruptcy right away.
Of the two scenarios mentioned, which one is right for you?
To determine whether you should delay bankruptcy or file for it immediately, there are a few things you need to know about bankruptcy. Under United States law, your right to file for bankruptcy is highly protected. Bankruptcy-related laws are enforced in a way that protects both debtors and creditors. Just as all of your other rights, you can exercise your bankruptcy rights, and there is no shame in doing so.
When should bankruptcy be your last resort?
Nearly a decade of recovery
Filing for bankruptcy seems like a good, quick fix, but it will remain in your credit report for almost ten years. And this is a very long time to wait and fully recover from the impact of filing for bankruptcy. In some cases, you may have to continue paying your creditor after the bankruptcy case is finalized. This is because some debts like student loans and back taxes are exempt from being included in the bankruptcy claim. If you’re in an economic struggle, you can look into the benefits of refinancing student loans instead of filing for bankruptcy.
The hiring process is constantly changing. The Society for Human Resource Management conducted a survey a few years ago, and according to their findings, 47% of employers verify the job applicant’s credit reports before making the final decision to hire. No matter the level of education and background experience you may have, having bankruptcy indicated in your credit report will only make it harder for you to land a good job.
No loan approvals and very high-interest rates
The moment you file for bankruptcy, creditors start considering you a high-risk consumer, and lenders are likely to be somewhat reluctant to lend to you. This makes it almost impossible to get a loan. Thus, any hope of renting a place to live, owning a home, or even purchasing a vehicle will be very difficult within the first years.
In case you get approved for a loan, there is a good chance you will face very high-interest rates and perhaps pay twice the service is worth it. With time, paying such high-interest rates for credit cards and approved loans will end up costing you a lot of money. Unfortunately, this is necessary to rebuild your credit score. This is why bankruptcy should be the last resort.