Monday, February 15, 2010

Bankruptcy

Declaring bankruptcy is the last resort for flailing loan recipients and should be avoided at all costs. A major “severe hardship” obstacle must be cleared to even obtain a hearing on a bankruptcy. If you’ve been kidnapped by Bigfoot or beamed up to an alien mother ship, you still may not qualify for bankruptcy. It’s the third rail of personal finance—don’t touch it or you’ll be scarred for life.

If there is no other way out and you’ve consulted an attorney and a financial advisor, then you may have no alternative but to declare bankruptcy—only if you have no choice.

Note that a great deal of misinformation is available, especially with Internet hucksters and other scam artists who promise that bankruptcy will wipe your slate clean if you do business with them— probably for a hefty fee. That’s just not so. Some debts, including student loans, cannot be simply “wiped clean.” They will haunt you for life under bankruptcy. As soon as you regain financial solvency the lender has every right to go after you for their money. And they will, using your IRS tax returns as evidence you’re making money again. That’s public information and easily available to your lender.

Plus, your bankruptcy hurts in other ways. It will

• stay on your credit report for up to ten years,
• render it nearly impossible to get additional credit, and
• impact your ability to get a job.

5 comments:

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  2. Hope not knowing what it feels like in a situation of bankruptcy, it surely sounds like a painful process

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  4. Bankruptcy can completely ruin your credit score. It should be avoided at all costs. Thanks for the informative post!

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  5. One should only declare bankruptcy only if all other options fail.

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