Filing for bankruptcy is devastating for most people because it is seen as an embarrassing financial failure. Aside from declaring that you are incapable of paying off debts, one reason why it is important to avoid bankruptcy at all cost is the effects it has on your personal finances. Some who try their best to avoid bankruptcy San Diego are sometimes too late in their debt management efforts.
Here are some facts about bankruptcy that will give you a better idea on how serious the matter actually is and why debt counselors will only suggest it when there are no other options available:
Fact 1: It Is Not A Fast And Easy Solution
Filing for bankruptcy is not an in and out process that is completed in a day. The borrower does not just go to a small claims court, file the papers, and move on. No, it is not that easy. The process can last anywhere from 6 months up to 5 years, depending on what Chapter bankruptcy is being filed.
With all the hassle and effort involved in the process, if you can’t stick it out until the very end, it is best to see solutions that will help you avoid bankruptcy soon.
Fact 2: Vulnerable To The Public Eye
Most of us are uncomfortable when it comes to discussing our personal finances even to the people we are close with. Before filing for bankruptcy consider how much scrutiny your financial mistakes will be placed up. Everything from your debts, income, expenses, and even your most recent transactions will be requested and examined.
Borrowers are also required to go to a meeting with creditors where they are asked probing financial questions while in a very public room. Creditors are allowed to ask anything which can be very embarrassing and also demeaning.
Fact 3: Affects Credit Scores For Years
Opting to file for bankruptcy also means carrying the burden and mark of your financial blunder years after. Chapter 7, the most common type of bankruptcy can stay on your credit records for at least two years, but some can even last up to 10 long years. This can put a damper on future financial plans as securing a loan will be difficult until the records no longer show bankruptcy.
In other cases, some creditors will offer loans to people who have filed for bankruptcy, but this comes with very high and impossible to pay interest rates which can further ruin an already damaged credit score.
Fact 4: Filing Process Is Not Cheap
The process required to file for bankruptcy is complicated and very detailed. In most cases, borrowers need to hire a lawyer on retainer until the very end. This adds to a person’s financial strain and it will be hard to pay the attorney for their services once you no longer have funds.
Avoiding Bankruptcy At All Cost
Unless you are sure you can recover fully from bankruptcy and are not shy about sharing your financial details for the public eye to see it is best to go through programs that will help you avoid bankruptcy San Diego agencies offer.