Many people feel like they are “dying” if they have to apply for bankruptcy shelter. The idea that you might have to file for bankruptcy surely can bring a sickening feeling chilling down your spine. Regrettably, the consequence for filing bankruptcy is the damage that has been done to your credit report. If you are in dire financial position with mountains of debt and with no power to pay it back, you should not let something like the credit score stop you from filing bankruptcy. Bankruptcy is a choice that everyone can take, and if done wisely, can essentially allow you to have a fresh start in life. Under what financial situation should you seek bankruptcy protection?
It will be nice if there is a certain rule that dictates when you can or should file for bankruptcy shelter. Bankruptcy is a private matter and you are the best judge to ascertain if you should be going down this path to remove your debt. A simple way to ascertain if you need to apply for bankruptcy is if you can survive the next 3-5 years without any special financial aid.
Can you pay back your debt within 3-5 years and yet still live a well-off life (by no means excessive like before)?
If you can afford to pay back the creditors in 3-5 years, all the while still pay for the basic things in life, then you should not file bankruptcy at all. On the other hand, you should consider filing bankruptcy if you are having a difficult time paying back your creditors when it will take you 3-5 years just to pay back your debt.
This whole idea can be better explained with a concrete number demonstration. You have accumulated over $50,000 in credit card debt. Credit card companies charge one of the highest interest for the loan they extend to the customers. In this example, we will pick a low number such as 20% APR for the interest payment. In our scenario, you will need to pay $$500 for the next 8+ years in order to pay back the initial $50,000 + interest. If there is no way for you to part with $500 per month for the next 8+ years, then this is the time that you should think about bankruptcy. In this scenario where it is next to impossible to pay back the debt, and your choice is to file for bankruptcy shelter, then you should save the $500 per month that you were planning to pay back the creditors for future use. Whether or not you are filing for bankruptcy, chances are your credit is already bad during this 3-5 year period, so do yourself a favor and seek financial relieve with bankruptcy protection.
Worrying that your credit history will be damaged is the worst reason not to apply for bankruptcy. It is entirely possible to have even better credit score post bankruptcy if you stick to a right plan to help you reestablish your credit. Some people have even achieve high 600 or low 700 credit score several years after their bankruptcy filing. Not only will your credit score go up post bankruptcy, it is even possible for you to qualify for a FHA house loan 30 months past your bankruptcy filing. Filing for bankruptcy is not the end of the world for you, it is just the beginning. If you need help structuring your bankruptcy strategy, look for a bankruptcy lawyer who can help you along the way. Filing bankruptcy should have taught you a life-long lesson. You should be aware of the type of financial problem you can get yourself into if you are not careful with your money management. Take charge of your life and aim to stay debt free forever.
Steve Sanchez has recently overcome the economic depression of 2008-2009 by declaring bankruptcy. Even though bankruptcy has devastated Steve financially and emotionally, Steve has rebuilt his businesses in the last 6 months and he has not looked back since.One of his project is to educate people on bankruptcy. Having gone through the ordeal himself, he has first hand knowledge of the pros and cons of filing for bankruptcy protection. Please visit his site http://ToFileBankruptcyOrNot.com if you want additional information regarding bankruptcy.