The Pitfalls Of Personal Bankruptcy

Several recent changes in U.S. law has made it much more difficult for consumers to file for personal bankruptcy. When a consumer files for bankruptcy he will appear before a judge for a preliminary hearing and may be instructed to seek debt counseling before proceeding. Once debt counseling is complete, the judge may decide not to discharge of the debts and require the consumer to repay some of those outstanding funds too. Clearly, personal bankruptcy isn't what it used to be! Filing for personal bankruptcy has other pitfalls to this action too; please keep reading and we'll see why this method of "debt resolution" isn't what it used to be.

If you file for personal bankruptcy and the court agrees with your move, you may find the move more painful over the long run:

A bankruptcy will stay on your records for at least 7 years; on your three credit reports for as long as 10 years!

Any future employer will learn about your personal bankruptcy. Don't think for a moment that this bit of information doesn't keep people from getting hired!

You will not be able to purchase another home for quite some time, perhaps several years. If someone agrees to extend a mortgage to you, expect that you'll have to put more money down and pay a much higher interest rate on your loan. Loans as much as two points higher for people with bad credit is commonplace.

Getting an apartment, buying a car, even buying insurance becomes much more difficult to do with a personal bankruptcy on your records. Please know this: mostly anyone can pull your credit reports and credit scores to learn all that needs to be known about you.

Now you know the pitfalls of personal bankruptcy, so how do you avoid it? Well, by taking aggressive action including:

Contacting each creditor to renegotiate your debt. They'll be receptive to this idea if the words "personal bankruptcy" is uttered by you in your conversation with them.

Sell whatever items you can to raise cash. That second car, motorcycle, anything else of value needs to go.

Work on a budget and change your spending habits. Take on a second job and cut back on expenses. Your very livelihood is at stake. Think this is dramatic? Try doing without health insurance because you were turned down due to a bankruptcy filing!

In the end, avoiding the pitfalls of personal bankruptcy rests solely on your shoulders. Do what it takes to avoid such a fate or pay the consequences later!