When Should You Consider Filing for Bankruptcy?

  • Bankruptcy Dallas

When Should You Consider Filing for Bankruptcy?

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Filing for bankruptcy is a decision that should be taken after careful consideration regarding the long term implications, say Dallas based bankruptcy law firm Recovery Law Group. This is a sane advice since bankruptcy has serious ramifications which last quite long. Bankruptcy is an indicator of financial risk. The records are public and appear on your credit report. Thus, every lender becomes aware of your financial situation and getting credit, therefore, becomes difficult. Experienced bankruptcy lawyers say that filing for bankruptcy should always be your last option.

The most common chapters individuals can file bankruptcy under are Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, no repayment of debts takes place and thus it remains listed on the credit report for 10 years from the filing date. Individuals who file under Chapter 13 repay some part of their debts through a court-approved repayment plan. This type of bankruptcy is therefore removed from the credit report after 7 years from the filing date. Since your credit report is an indicator of your financial stability, mention of bankruptcy for such a long period can ruin your chances of getting any loan. It is therefore important to weigh-in other options before filing for bankruptcy in Dallas.

Options other than bankruptcy

People are so accustomed to credit cards that living without them seems impossible, and it is difficult indeed. With bankruptcy on your credit report, you will find it difficult to get credit, except at high interest and unfavorable terms. This will affect your ability to get an apartment, utilities, insurance as well as job. It is important that you get the latest copy of your credit report to assess the debts you owe. You should also seek counsel from a qualified financial advisor for alternatives to bankruptcy. It is possible that through careful budget planning, you might be able to repay your debts over a period, especially if you could get the lender to agree for debt consolidation or debt settlement.

  • In debt consolidation, your debts are combined into a new account. You make just one monthly payment towards this new account to diminish your long-standing loan. Smart budgeting can help you catch up on past payments without the risk associated with bankruptcy.
  • Debt settlement, on the other hand, involves negotiations with creditors to accept an amount less than the balance or reduce the interest rate so that the debt can be settled. Though this also portrays you in a negative light, the repercussions are less severe than bankruptcy.

If you are in no position to pay your debts, bankruptcy might be the best possible option available. It puts an end to all collection actions like repossession, wage garnishment, foreclosure, etc. and gives you time to get hold of your finances. Since bankruptcy filing is a decision which should not be taken lightly, it is advisable to consider professionals before filing it. You can call 888-297-6023 to consult with experienced bankruptcy lawyers.