Filing Bankruptcy it Get Back On Your Feet

While it remains a subject that most people don't like to talk about, the unfortunate reality is that personal bankruptcies are increasingly common. With a down economy more and more people are filing bankruptcy to eliminate credit card debt in the hopes of starting their financial lives over with a clean slate. The following are important factors when considering filing bankruptcy.

It is true that there are severe cases where bankruptcy is the only clear option. However, it should be regarded as a money management tool that should only be used as a last resort. Because it has serious implications on a person's life for years to come, it is not a decision to be entered into lightly.

Once a person has filed for bankruptcy, all credit card accounts will be closed. An individual will not be able to obtain new credit card accounts for some time. On the positive side, excessive credit card debt is the most common cause of most bankruptcies, so it may be beneficial for a person to learn to live without relying on them.

Bankruptcy makes it next to impossible to obtain a mortgage. On the positive side, if a person filing bankruptcy already has a home with a mortgage, they should not lose it. Most states allow the exemption of a home, vehicle, and other basic essentials. While a person will not end up homeless, pursuing that dream house will become a goal that will have to be pushed back for quite some time.

It's also important to keep in mind that not all debt is eligible for discharge through bankruptcy. Back taxes and student loans are not covered through bankruptcy. However, bankruptcy does get rid of most debt and also stops debt collectors from using extreme tactics to collect their money, such as garnishing wages. It also ends the constant barrage of debt collection phone calls.

Finally, bankruptcy stays on a person's record for ten years. This can hinder a person from getting loans, buying or renting a home, obtaining a car, getting insurance, or perhaps even obtaining work. On the upside, filing bankruptcy does get rid of credit card debt and other bills, allowing a person to have a chance at a fresh start financially. Arming oneself with the facts about bankruptcy and seeking advice from an attorney can help make a difficult decision a little easier to make.