Consequences of Bankruptcy
Written by Lee Wyatt (last updated August 23, 2013)
If you are facing some serious monetary troubles, then chances are that the thought of filing for bankruptcy has at least gone through your head at least once. After all, filing bankruptcy should take care of all the money problems that you are having, right. That is the conventional and common wisdom anyway, the truth is somewhat different. Before you rush out and hire an attorney to help you file your bankruptcy claim, make sure that you know what some of the consequences of bankruptcy are. If you don't, you can potentially find yourself in a much more serious financial situation than you would normally believe.
- Impact on credit score. Regardless of what kind of bankruptcy you file, you can expect there to be a negative hit on your credit score. This hit will remain on your credit reports for a minimum of six years, though they can also last for as long as ten. In large part it will depend on which credit agency you look at, in addition to what type of bankruptcy you end up filing.
- Future credit difficulties. As the hit to your credit score should tell you, there can also be some difficulties in getting future credit. That is, at least until you have cleared the bankruptcy off of your credit history. That means that if you have to get an emergency car repair, or some type of emergency health care, then you may have a bit of difficulty working out some favorable terms.
- Can still owe money. Contrary to what most people think, it is still possible to owe money after filing bankruptcy. Granted, it usually only happens if you file Chapter 13 bankruptcy, but it can still happen. In fact, if you do file Chapter 13 you can pretty much assume that you will be needing to pay back at least some of the money that you owe since Chapter 13 bankruptcy is more of a repayment plan than what most people view as traditional bankruptcy.
- Possible employment problems. One of the more troubling consequences of bankruptcy is that it can have a negative affect on your current or future employment. For example, if you were looking to get hired on as a managing capacity, or hold a position that has some type of security clearance involved, then you can pretty much kiss it goodbye. Filing bankruptcy is often seen as a sign that you are not fiscally responsible, and that irresponsibility may also extend to other areas in your life. While it is not always true, there have been plenty of examples of this happening in the past for this attitude to be firmly in place.
- Potential loss of property. Depending largely on the type of bankruptcy that you are filing, you can expect to loose some, or most, of your personal assets. This is usually done in an attempt to recoup some of the money that is owed to creditors. On the average, about the only assets that won't be affected are those that you need for day to day life.