Avoid Bankruptcy
If you are swimming in debt, you may come to experience foreclosure and bankruptcy. Your monthly income is just not enough to support your family and pay off bills. You are looking for a way out and it may seem like there is no hope. Some people may advise you to file for bankruptcy. This will “erase” your debts by giving up your property. You might also acquire some leeway in making payments. Millions of people come across foreclosure and bankruptcy, but there is no need for you to do so too.
Here are the reasons why you should not file for bankruptcy:
1. It has a negative effect on your credit score. Bankruptcy stays on your record for 10 years, while foreclosure stays for 7 years. Either way is a long time for you to be affected by this. You will have trouble asking for credit or buying a house in the future. Employers also look into this so your chances of getting a job can also be affected.
2. You may lose your assets such as your house or car. If you filed a chapter 7 bankruptcy, the banks will sell your property to pay off your debts.
3. Creditors may repossess your property if they file for “relief from automatic stay”. Filing for bankruptcy is only temporary so you should still find ways to get money.
4. You cannot get rid of all your debts. It does not cover student loans, child and family support, injury resulting from your drunk driving and taxes.
5. You will have a hard time asking for loans after you have had filed for bankruptcy. It may take at least 2-4 years just to get an approval for a loan.
6. It costs a lot of money to get a lawyer to file for bankruptcy.
How can you avoid foreclosure and bankruptcy?
1. Hire a credit counselor. They are more experienced in handling with debt and can get better interest rates for you. They can negotiate lower monthly payments so that it will be easier to pay off.
2. Consolidate your debt. Take out a loan with a lower interest fee compared to your debts. Pay off all your existing debts with the new loan so you can pay less each month.
3. Negotiate with your creditor. Make a plan to pay off your debts and keep your word.
Foreclosure and bankruptcy can really dampen our lives if we do not know what to do. They can cause a high degree of stress on the person. If you want to avoid foreclosure and bankruptcy, you should educate yourself on the subject.
