Bankruptcy can often feel like the other “b word”. It conjures images of financial ruin, debt collectors, and extreme loss, but the truth is that bankruptcy can serve as an effective solution for people in certain financial situations. If your finances are in ruins and you’re not sure where to turn, speak to an attorney to determine if bankruptcy could actually be the lifevest you need to survive the storm.
The Downsides of Declaring a Chapter 7 Bankruptcy
It’s no secret that declaring bankruptcy has a major impact on your credit. Not only does the “scarlet letter” of a Chapter 7 bankruptcy remain on your credit report for up to 10 years, but it also makes it very difficult to get a mortgage, credit card, or other loan in the near future. Bankruptcy also means that you risk losing some of your property if it isn’t exempt from the bankruptcy trustee. While it’s usually possible to retain possession of your car and home, other items deemed “luxury” possessions will most likely be taken to pay down your debts
Furthermore, bankruptcy cannot be used to clear student loan debt, alimony, or child support obligations. The government limits an individual to filing for a Chapter 7 bankruptcy once every six years, so if you declare bankruptcy now, and then have something worse occur in the future, you may not have another way out for six years.
The Benefits of Declaring Bankruptcy
Though your bankruptcy will hurt your credit, not declaring bankruptcy and collecting missed debt payments, defaults, repossessions, and lawsuits will also damage your credit beyond recognition. In many cases, a bankruptcy is far easier to explain to future lenders than an abundance of issues on your credit score. Furthermore, there are credit cards and mortgage lenders who are willing to extend loan options to you after a few years, though you might pay higher interest rates. This means that a bankruptcy won’t preclude you from getting back into a normal financial rhythm, but it will simply take time.
For more help navigating the complex option of bankruptcy, call 813) 579-6762 to speak to an experienced bankruptcy attorney at North Tampa Law Group. The empathetic, responsive, and dedicated lawyers at North Tampa Law Group represent clients during stressful and difficult times, so you are sure to get the help and attention that you need.