Filing for bankruptcy gives you a fresh start financially by wiping the slate clean from bad debts. When you find yourself in over your head financially and unable to make your monthly payments without going further into debt then filing for bankruptcy might be your best option. You should always consult with a financial expert before filing the paperwork, so you can plan out the best option for your specific financial situation.
Here are some of the important things you need to know about filing for bankruptcy:
Filing For Bankruptcy Will Impact Your Credit For Seven To Ten Years
Filing for bankruptcy has a negative impact on your credit report and will stay on the report from anywhere from seven to ten years. That means that you may have difficulty securing any new credit or loans during that period as it will should an immediate red flag when anyone runs your credit.
You could potentially be listed as a credit risk because of your bad debts, and old creditors may refuse your business in the future based on past loans that you forfeited on. Some creditors that will take the risk may charge you additional interest or fees to compensate for the risk that they are taking on giving you a loan.
Your Bank May Close Your Account
In the event of a bankruptcy creditors will come looking for money and will attempt to get as much money as they possibly can from your bank account. In order to protect them from potentially losing money from overdrawn bank accounts a band has the right to close out an account when they receive the notification that you have filed for bankruptcy.
That means you should attempt to set up a brand new account before the paperwork is filed, so you have a back-up account you can use in the event the old one is closed by the bank.
You Need To Establish Fresh Credit Without Going Back Into Debt
When you file for bankruptcy you need to start establishing positive credit on your credit report to wipe away the negative of filing for bankruptcy. That means you should work to get some type of loan where you can successfully make monthly payments to establish a positive credit transaction history.
Because bankruptcy shows up on your credit report you may be required to get someone to co-sign for your loan, but it will help to get you back on track financially. Things like a car loan, line of credit or credit cards are a great way of establishing fresh credit after a bankruptcy. To learn more, contact a professional like Attorney John A McLaughlin Jr PC for help.