Downside of bankruptcy

November 13, 2009

If you are considering filing bankruptcy, it is important that you are aware of both the advantages and disadvantages of taking this legal action. Bankruptcy, while it may be the right solution for your debt problems, is not without its downside.

First is the effect that bankruptcy will have on your credit. Bankruptcy remains on your credit report for as much as 10 years. During those 10 years it will be difficult for you to obtain credit and loans. If you are approved for a loan, it will likely be at a much higher interest rate. 

Even when bankruptcy is no longer on your credit report, you will always have to answer yes to having had a bankruptcy when asked on an application for a credit card or loan.

The second downside to filing for bankruptcy is the effect that it can have on your future employment prospects. Certain industries will not hire individuals who have filed for bankruptcy because they are considered to be high risk.

A third potential downside to bankruptcy is the effect that it can have on your ability to rent housing. Applications for rental housing often include credit checks, and having a bankruptcy on your credit report can result in a denial of your application.

Fourth, having a bankruptcy on your credit report can also adversely impact your ability to obtain car insurance. Some car insurance companies will deny your request for insurance, and others may charge you much higher premiums.

Last, you should also consider the cost of filing bankruptcy. Bankruptcy is not free. Once all is said and done, it will likely cost you around $2000 to file bankruptcy.

If you’re considering filing bankruptcy, you are well advised to first speak with a qualified bankruptcy attorney. The bankruptcy lawyers of Fears | Nachawati will provide you with a free initial legal consultation. Simply email us at info@fnlawfirm.com or call our toll-free number at 1.866.705.7584.

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