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Filing for bankruptcy is a very personal decision. Heavy debtors may choose to file a bankruptcy if they see no other way out from their heavy debts. By declaring bankruptcy and filing a petition with U.S. Bankruptcy Court, the bankruptcy filer will be protected and relief from debts under the Bankruptcy Code.
Bankruptcy filing should be you last option if there are no better options available, because the consequences of filing a bankruptcy will follow you for 7 to 10 years. These are some of the consequences of filling for a bankruptcy:
1. Hard to Obtain Credit
If you wish to buy a house in the future, there will be a two-year waiting period after the Chapter 7 case is discharged before you will be deemed eligible for a home loan. When a Chapter 13 bankruptcy case is involved, the waiting period is twenty-four months after the debts are paid off in full.
2. Negative Impacts If You Are In Business
You will not be able to be a director of a company or hold certain offices. You will also have to inform any people you do business with the name in which you were made bankrupt; this may has negative impact on your company's reputation.
3. Higher Loan's Interest Rate
Bankruptcy filling has the most damage on your credit record if compare to other debt solutions. Your bad credit record will remain on your credit report for 7-10 years and if you are getting any loan after your bankruptcy discharged, your loan's interest rate will be higher than normal.
Steps Involved In Bankruptcy Filing Process
The first part of the bankruptcy filing process is collecting your personal financial information. This includes your existing secured and unsecured debts and tax returns for past two years. Prepare all your deed documents which include real estate you own, car title, land title and other loan documents. You may want to order your credit reports; these reports will provide you some helpful information on your past records.
Then, you either assign a bankruptcy attorney or you can choose to file the bankruptcy yourself. If you choose to file the bankruptcy yourself, you need to get the bankruptcy forms (you can get these forms online) and get them fill up. You have to fill in your current financial status and recent financial transactions (within last 2 years) into the bankruptcy forms. At the mean time, you need to decide to file under what type of bankruptcy; there two commons types which are Chapter 7 and Chapter 13.
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