5 Unexpected Consequences of Declaring Bankruptcy
Saturday, February 15, 2014, 1:00 AM | Leave Comment
Bankruptcy is often considered a viable option for those who are unable to pay off debts and regain a firm financial standing. Although it works to forgive outstanding debts, there are a number of consequences that come along with filing that can have long-term effects that many people don’t think about.
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Missed Career Opportunities
Filing for bankruptcy will stay on your record for a number of years, as Chapter 7 will be recorded for 10 years and Chapter 13 will be removed after 7 years. This can affect promotions and job opportunities that involve financial transactions as the bankruptcy is available on public records and can freely be viewed by potential or current employers. It can additionally prevent your appointment to leadership roles in civic organizations you may wish to participate in.
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Losing Personal Assets
Many people assume that filing for bankruptcy means that their debt is erased, but that they can still keep the assets they’ve acquired and the products that made them get into debt in the first place. Personal property, vehicles, and general items can be seized to offset the amount of debt that is owed. However, certain assets can be protected in court when recruiting a good lawyer like Paddon & Yorke Inc. Your best bet is to recruit solid help in your area to protect your possessions as much as possible.
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Losing Custody of a Child
For those who file bankruptcy with bankruptcy trustees in Brampton while in the middle of a custody battle, it can easily weaken their case and make it easy to lose custody if you’re unable to provide financial support of the child. Depending on the judge, a bankruptcy could definitely be held against you. Filing for bankruptcy will also not relieve any alimony or child support payments that you are required to make.
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Difficulty Making Purchases
Because bankruptcy stays on a credit report for about 7-10 years, this makes it difficult, if not impossible, to make future purchases that include obtaining a new vehicle or home. If you’re able to obtain the loan, it can often include incredibly high interest rates. These problems arise because your credit takes a severe hit when you declare bankruptcy. Many people don’t realize the long-term extent to which their credit score matters.
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Bankruptcy Can Be Expensive
For those who are drained of their resources, bankruptcy can be difficult to afford and can take several years to settle. Attorney fees can range from $2,000 to $3,000 depending on the type of bankruptcy you file for. Having these sort of fees on top of other financial difficulties can make it very difficult to climb back out of the financial hole.
Filing for bankruptcy can be the easy way out for many people who are strained financially due to debt, and there are many people for whom it is a good option.
However, there are a number of consequences that come along with the process that may not make the bankruptcy worthwhile. It’s important to exhaust all other options before declaring bankruptcy.
If you do decide to go that route, make sure you truly understand the far-reaching consequences in advance.
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