Eliminating debt is on the forefront of everyone’s mind these days. There are dozens of different strategies and methods
of debt elimination you can try, however only one strikes fear in the hearts of most consumers- bankruptcy. Known as the last resort, the final option, the “worst case scenario”, bankruptcy today is much different than it was a few years ago. No longer having the option to completely wipe the slate clean and start over, more people are thinking twice before filing for bankruptcy. That being said, bankruptcy is in fact the best option for a select number of consumers and contrary to popular belief- there is life after bankruptcy. Before you consider this drastic option, first understand what will happen when you file and what you can anticipate in the years to come.
What Is Bankruptcy?
Bankruptcy is a legal process where the person filing the request declares their inability to repay their debt as it currently stands. The two most common forms of consumer bankruptcy are Chapter 7 and Chapter 13 bankruptcies. When an individual files for a Chapter 7 bankruptcy it is often referred to as a liquidation which basically allows debtors to give up assets that are not exempt. These assets will be sold or returned to creditors in lieu of repayment. In a Chapter 13 bankruptcy, the person filing agrees to restructure their debt in a way that allows them to repay part of all of the debt under new and often longer or more forgiving terms. Your ability to repay your debt today and in the immediate future will determine which type of bankruptcy is right for your situation.
Life After Bankruptcy.
There is no denying the fact that life after bankruptcy can be difficult in terms of personal finance. Lenders will be less inclined to extend credit due to your history of not repaying loans per the original agreement. This poses an increased risk to lenders who are already leery of loaning money in a shaky economy.
When you file for bankruptcy, it will appear on your credit history for at least ten years. In addition to potential problems with lenders, you will also have to honestly answer the question, “have you ever filed for bankruptcy?” which appears on numerous applications for things other than credit. This may impact your chances of getting a job or approved for a number of other things in the future. When and if you qualify for credit in the future, you will undoubtedly see higher interest rates and less favorable terms than your peers who have not filed for bankruptcy.
As you can see, there are many negative consequences associated with filing for bankruptcy. The one positive that makes it worthwhile for qualifying individuals is the prospect of getting back on track financially and finally getting out from under an unbearable amount of debt. If you have exhausted all other options for debt elimination and find yourself in a position where you may never get out of debt without help, bankruptcy may be the best option for your situation. If this is the case, understand that you can repair and rebuild your credit in time. It is a long and often difficult journey, nonetheless, one worth taking if you can avoid the problems that got you in debt in the first place in the future.
Our goal is to help consumers get their financial lives in order. No matter what the circumstances you find yourself in, there are simple things you can do TODAY to help you Erase Debt, Spend Less, and Earn More 
Why is it the articles omit the information about personal retirement income, social security and SSI being exempt when figuring the debtors ability to pay debts in a bankruptcy case? I discovered this information while researching whether or not to file a chapter 7 or 13. To make certain I didn’t misunderstand what was read I had a consultation with a local attorney that specialized in bankruptcy law. Not only was it correct, it also helped reduced the amount of their fee by 25% due to less paperwork on the financial section and the possibility of objections from the creditors.