How will a bankruptcy influence your family’s finances?
At some point in your life, you may decide to file for bankruptcy. It’s a process that can help you, but you have to understand some of the ramifications of making the decision to file for such a classification. These are some of the ways a bankruptcy ruling could affect your family’s finances:
Negative credit score
One major problem of filing for bankruptcy is that it will leave a negative mark on your score for at least seven years. It could take longer for bankruptcy to dissipate. This may seem feasible to you if you have a lot of debt that you need to have discharged. However, some types of bankruptcy, such as Chapter 13, still require you to make monthly payments on your debt. It may not be worth it to file for bankruptcy status if you can’t qualify for Chapter 7.
Problems getting approved for financial products
The negative credit report and score will hinder your ability to gain approval for the financial products you may want. Lenders will be leery of awarding you with things like credit cards, personal loans, and the like. The worst time period after a bankruptcy ruling is usually the first two to three years. You’ll need to consider whether you can go that long without applying for a major financial product. If the answer is yes, then you can proceed to talk to a bankruptcy specialist about filing a case. If the answer is no, then you may want to try some other options for your credit relief. For example, you can consider debt consolidation, debt management program, or debt settlement negotiation.
Difficulty getting low-interest products
Even if you do manage to gain approval for a loan, car, or home, you may be looking at some hefty interest rates. For example, instead of paying maybe 6 to 12 percent interest on the product, you might have to pay a whopping 30 percent or more for interest when it comes time for you to repay your loan. It might not even seem as though it’s worth it for you to accept the loan or product, given how much you’ll have to pay back for it.
Problems getting a home
You may also have trouble getting a mortgage after bankruptcy. The only recourse you may have is to apply for a VA loan after bankruptcy. You may be fortunate enough to fall upon a program from a company that won’t hold your negative credit score or bankruptcy against you with the same level of seriousness as some of the other mortgage companies. However, the VA loan option will only work for you if you’re a member of the military or you have been one in the past.
Problems getting a job
Unfortunately, bankruptcy can also affect your family in terms of the type of jobs you can get. You may have a swarm of education and experience, but some employers check their applicants’ credit files before they determine whether they want to hire such people. This is especially true in jobs that deal with money. Therefore, you may have a difficult time getting a job as a banker, bookkeeper, accountant, or something similar. The idea is that you may not be equipped to manage other people’s finances if you have difficulty handling your own.
Think before filing for bankruptcy
Now you are aware of some of the ill effects that bankruptcy can have on you. It would be wise to consider them before you file for bankruptcy status. Ultimately, the decision is yours. However, you’ll want to ensure that you make a smart choice for yourself.