March 18, 2013

Bankruptcy

Bankruptcy Pros and Cons

What are the disadvantages?

Since your bankruptcy filing will remain on your credit record for up to ten years, it may affect your future finances. A bankruptcy is a troublesome item in your credit record, but often debtors who file already have a troublesome history.

In one respect, bankruptcy may improve your credit records. Because Chapter 7 provides for a discharge of debts no more than once every eight years, lenders know that a credit applicant who has just emerged from Chapter 7 cannot soon repeat the process.

Research in this area has produced mixed results. A study by the Credit Research Center at Purdue University found that about one-third of consumers who filed for bankruptcy had obtained lines of credit within three years of filing; one-half had obtained them within five years. However, the new credit itself may reflect the record of bankruptcy. For example, if you might have been eligible for a bank card with a 14 percent rate before bankruptcy, the best card that you can get after bankruptcy might carry a rate of 20 percent—or you might have to rely on a card secured by a deposit that you make with the credit card issuer.

>>What exactly is bankruptcy?
>>What is the process of filing for bankruptcy?
>>Right now, I cannot pay my debts. Besides bankruptcy, do I have any options?
>>Is there anybody in particular I should contact about these options?
>>I owe money to many creditors. What should I do?
>>What are the advantages of filing for bankruptcy?
>>What are the disadvantages?


Practical Law Home | Bankruptcy | *Bankruptcy Pros & Cons* | Chapter 7 | Chapter 13