Are You Considering Bankruptcy?

While bankruptcy seems like an easy way out of debt, it can have a significant impact your life.

Did you know that employers, landlords, insurance companies and lenders may review our credit report in addition to our application? That's right, we could be denied a job, housing, insurance or a new loan because we've filed bankruptcy.

You see, we become high risk borrowers after filing bankruptcy. While bankruptcy does NOT bar us from credit forever, we probably aren't going to qualify for a traditional bank/credit union loan right away. We have to prove over time, maybe as long as 2 years, that we can be responsible with our accounts. I know, I know, we've all heard stories of those who have filed bankruptcy and then gone out and purchased a brand new home or car. What we don't often hear is the interest rate that person may be paying for their new purchase. Those who aren't willing to wait to re-establish credit will most likely turn to a high risk lender, paying a significantly higher interest rate for their new loan (up to 25% APR or more).

Example: A 3 year, $10,000 car loan at 8% would cost us $12,400. The same loan at 25% interest would cost us $17,500. That's a difference of $5,100! Bankruptcy is your choice. It was designed to give those experiencing true hardships (medical, death, divorce) a way to make a fresh start. It is a right that is available to you, but should not be taken lightly. Before deciding if bankruptcy is right for you, please research ALL of your options...communicate with your creditors, work out a payment plan, get professional help from a local credit counseling agency. If bankruptcy is truly your best option, make your fresh start and take positive steps to re-build your credit history. Develop and use a budget, live within your means, make good choices about your money, and BE PATIENT. After all, credit is a privilege to be earned, not a right to be expected.

This section contains some basic information to help you become more aware of the bankruptcy options available to consumers. The information in this section is for general information purposes only. If you need legal advice or additional information on bankruptcy laws, please seek help from an attorney.

For more detailed information about the bankruptcy process, VISIT: www.uscourts.gov/bankbasic.pdf

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