- March 11, 2015
- Learning Library
The Consequences of Filing For Bankruptcy
People declare bankruptcy when they are not able to pay off their debt. It is usually a last resort however, many people feel it is a good way to eliminate their debt obligations. There are long term consequences to seriously consider before doing so!
Declaring bankruptcy will negatively affect your credit rating and remain on your credit report for 7-10 but it can also keep you from getting new lines of credit and even prevent you from getting a job!
Bankruptcy may prevent foreclosure on a home or repossession of a car and it can stop wage garnishments but it doesn’t get rid of all financial obligations, such as:
- Child Support;
- Debts that arise after bankruptcy is filed;
- Some debts incurred in the six months prior to filing bankruptcy
- Loans obtained fraudulently;
- Debts from personal injury while driving intoxicated;
- Debts from willful and malicious injuries to person or property;
- Some student loans; or
- Some taxes.
The process of filing for bankruptcy can be costly and complex and can only be granted by a state or federal court. It may not be the best decision you could make – you should consider other possible options before declaring bankruptcy, such as debt consolidation or debt settlement, which may have less negative impact on your credit rating.
For more information about bankruptcy and other debt-relief options visit the Federal Trade Commission CONSUMER INFORMATION WEBSITE.