In most cases, bankruptcy should be your last resort,
NOT a way out. It is truly major "credit surgery." Because of the severe
consequences, it is important that you consider all the pros and cons of bankruptcy
before you file. Bankruptcy will remain as a public record on your credit
report for 10 years. However, a Chapter 13 bankruptcy, in which you repay
part or all of your debts under a court–approved payment plan, remains on
your credit report for 7 years. There are some debts that bankruptcy does not
excuse. For example:
most taxes;
student loans;
alimony and child support;
debts incurred through fraud or theft; and,
criminal restitution.
Also, some of your assets including your retirement savings and other investments
may have to be sold or cashed out to pay your debts. If you are considering bankruptcy,
think about this: Filing bankruptcy costs money. This explains why some attorneys
promote it as a fresh start. When you file bankruptcy, your credit history will
be damaged for up to TEN years. On the other hand, if you do nothing, your credit
will be damaged for up to 7 years. So, in essence, you are paying an attorney
for the priviledge of having an additional 3 years of negative credit. Do not
use bankruptcy to "get the bill collectors off your back." If you find
yourself being harrassed by bill collectors, don't hide. Let them know your
situation. If you can't handle their pressure, send them a letter
to cease communication. Once they receive it, they are prohibited from contacting
you. Unfortunately, there are some situations where bankruptcy is necessary. For
a list of reputable bankruptcy attorneys contact the Lawyer's
Referral Service of your county
or state Bar Association.
