Consequences of Bankruptcy

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Consequences of Bankruptcy

Bankruptcy may be a way for people who have a lot of unmanageable debt to start over. Nevertheless, the consequences are both positive and negative.

Positive Consequences

When you successfully file for bankruptcy in the bankruptcy courts, you will be able to eliminate your debt, improve your credit score, and have peace of mind.

Essentially, you may not have to repay your debt from credit cards, business loans, foreclosures, and back rent. And ultimately, you may be able to improve your credit score. Though filing for bankruptcy may initially hurt your credit score, you may hurt your credit score even more by not being able to repay your debt. Thus, filing for bankruptcy may hurt your credit score less than you attempting to repay your debt.

Lastly, you will get peace of mind as creditors and collections are legally required to leave you alone.

Negative Consequences

The negative consequence of bankruptcies involves hurting your credit. However, your credit is already poor when you qualify to file for bankruptcy. This is only a matter of degree of how much your credit score is affected.

Moreover, once you file for bankruptcy, you cannot file for it again for another 8 years. And the bankruptcy may be noted on your credit report for 10 years. Thus, you may have a hard time getting any future lines of credit.

Consulting an Attorney

If you are considering the possibility of filing for bankruptcy, please consult a bankruptcy lawyer. The bankruptcy lawyer can go over in detail the pros and cons of bankruptcy. And overall, he can help you determine your long-term goals and whether you are a good candidate for bankruptcy.

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Last Modified: 02-11-2015 02:26 PM PST

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