Tips Series: Top Reasons Why You Need to Avoid Bankruptcy

by safoocat

Here is our latest article on Avoid Bankruptcy

Petitions for bankruptcy are still on the rise despite a slight sliver of economic recovery. That is because the job market is still reeling from the crisis and certain economic sectors are not yet recovering. If you are experiencing deep financial troubles and you can not keep up with your obligations, then you must not think that bankruptcy is your only solution. You have to avoid bankruptcy at all cost. First of all, bankruptcy fees are very expensive. Most importantly, bankruptcy has long term adverse effects on your financial position and credit reputation. Here are the top reasons why you have to avoid filing for bankruptcy petition.

Aside from expensive bankruptcy fees and convoluted procedures, bankruptcy will result to long term damage to your credit worthiness. You have to remember that your bankruptcy petition will stick to your financial record for many years to come. For example, a Chapter 7 bankruptcy will remain in your credit report for ten years. On the other hand, a Chapter 13 bankruptcy will be on your record for 7 years. Because your credit rating has been tarnished by your bankruptcy petition, you may find it more difficult to obtain mortgages, loans, and credit card companies will deny your application. If ever you get a loan, you will be considered high risk and will be given higher interest rates.

Another major reason why you have to avoid bankruptcy is the prospect of losing your assets and properties. This is particularly true if you are filing for Chapter 7 bankruptcy. Your properties will be liquidated by the courts in order to pay the creditors. So you will end up with nothing after you pay the expensive bankruptcy fees. Besides, snot all debts can be discharged by bankruptcy. You will still be compelled to pay your obligations like taxes, student loans, settlements on property, criminal fines, student loans and many others. So there is no truth to the claim that you will be debt free if you file for bankruptcy. Remember, you have to shell out money to pay bankruptcy fees, pay the lawyer, and spend for documentations. These are real expenses that you have to shoulder out of pocket but the worst thing is that you will still have debts to overcome.

It has become more and more difficult to file for bankruptcy nowadays. After the recent legislation on bankruptcy, the list of non dischargeable assets has been expanded. Furthermore, you will pass through a difficult proceeding and you may not be granted a Chapter 7 filing by the court. Your other retirement accounts may also be put in danger because these will be used to pay off your creditors. That is why you have to avoid bankruptcy at all cost because you will simply end up in a worse situation than before.

The best thing that you can do to avoid bankruptcy is to efficiently manage your finances. You have to overhaul your spending and increase your savings. You should also try other alternatives to bankruptcy such as debt management program, debt restructuring, renegotiation, and other equally effective alternatives.

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