Bankruptcy, like everything else, has its consequences- both good and bad. If you plan to declare bankruptcy in order to get out of the sea of debt, you might want to know how bankruptcy will affect you and your life. Following are both sides of the coin to help you make the right decision.
The Negatives
- Temporarily destabilized credit: A bankruptcy appears as a negative mark on your credit report, and once the bankruptcy is filed, it stays on your credit report for about 7 years or more. However, with time, the effect of bankruptcy on the whole ebbs away and your recent actions begin to highlight your credit report.
- Problems in getting loans approved: Since the Bankruptcy filing appears as a black mark on your credit report, it would be extremely difficult for you to qualify for a loan in months directly following the bankruptcy. Even if you do qualify, it would be for low dollar amount-high interest loans only.
- Trouble in getting work: Unfortunately, for some employers, bankruptcy is a reason good enough to not hire someone. Nowadays, employers carry out credit checks in addition to criminal background checks for prospective employees. So if you do not have a job at the time of bankruptcy, you might have trouble finding one immediately after.
The Positives
Fortunately, not everything resulting from bankruptcy is negative – no matter how we see it, bankruptcy is in fact is a protection intended to relieve the burden of liability for people struggling to make ends meet. Listed below are some of the specific positive effects you can generally expect when filing for personal bankruptcy:
- End of lender contact: Once you file the bankruptcy, you are then legally protected that takes effect. This protection stops all sorts of creditors from contacting you, which eventually means that you no longer have to be intimidated by threats of repossession, foreclosure or garnishment through any mode of communication during your case.
- A new financial beginning: the decision to file for bankruptcy is a major step, and thus offers an important reward: a chance to rebuild your life financially. If your bankruptcy case proceeds normally, you have an opportunity to restructure your finances so that they are healthier and better than when you filed for bankruptcy.
- Improved credit than before: Immediately after the bankruptcy, your credit rating will definitely take a hard blow, but as you learn from your past mistakes and take steps towards a better, financially secured life, you have a chance to create a strong credit.
For more on how to make the most of these positive effects and alleviate the damage from the negative aspects, you might want to approach credit counselors at GTA credit to steer you through this financial storm.
