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The Benefits of Filing For Bankruptcy
Bankruptcy has always been linked with negative things. After all, different media portals have always been downplaying this credit-busting option. But is bankruptcy really that bad?
In truth, when done for the right reasons, bankruptcy can actually be advantageous. It can work wonders in reliving anxiety of consumers over their financial problems. But how is this possible? And what benefits can consumers enjoy once they have filed for bankruptcy? Below we have provided the answers to these questions.
Benefits of Bankruptcy
Once your application for bankruptcy has been approved, you can immediately experience the following benefits:
1. Discharge most, if not all, of your debts. Bankruptcy can actually free you from all your exiting credit accounts. The reason for this is that bankruptcy terminates your obligation to payback whatever amount of money you owe your creditors.
What About Loans While In Bankruptcy?
The first thing you should keep in mind is that you should not allow bankruptcy to keep you from getting a needed loan. However, there are a few measures that should be taken first.
1) Discharge your bankruptcy first, then apply for the loan. Do not start the process while you are going through the bankruptcy period. This would warrant a super low score and a reject notice from the prospective lender. You actually need about 6 months to pass after your bankruptcy. Sometimes, you can get your loan application processed earlier, but never more than 2 months after the bankruptcy has been discharged.
2) Have something put in your credit record that show that your financial behavior is better than the pre-bankruptcy period. This is difficult to accomplish given the fact that no lender will consider loan application before at least 2-3 months after discharge. However, do not be disheartened.
Three Compelling Reasons to File for Bankruptcy
Private bankruptcy filings soared 9% in October 2009, making it the most popular month for these filings since the laws surrounding bankruptcies changed in 2005. This surge indicates an overall upward trend in these filings: according to the American Bankruptcy Institute, the 1.2 million filings that have taken place through October this year already surpasses the 1.1 million filings made in all of 2008. If you’re one of the many Americans considering this option, you might be wondering what scenarios would make filing for bankruptcy right for you. While there are many reasons to take this step, there are three particularly compelling reasons to join the ranks of those filing for bankruptcy.
1. You Owe More Than You Own
If your debt exceeds your assets to the extent that you cannot even make your minimum payments, filing for bankruptcy might be the right choice for you. In fact, you may have little choice left other than bankruptcy, particularly when your creditors are not willing to work with you to find another solution. While filing would not eliminate all of your debt, it would eliminate most of it. Hopefully, your income and assets would cover payments on the amount that’s left over. Though no one wants to become another of the many bankruptcies filed, in this situation filing for bankruptcy will most likely do more good than harm.
2. You Want to Keep Your House
Filing for Chapter 13 bankruptcy will usually allow you to keep your home. If you are behind on payments and your creditors are about to foreclose, this may be your best option for keeping your home. Though this filing will not erase the debt you owe on your mortgage, it offers you the chance to restructure your debt and payments in a way that will allow you to repay the amount you owe over the next 5 years. If there’s not another way for you to keep your home and keeping it outweighs the negative consequences that surround bankruptcy, filing for Chapter 13 would be a good choice for you.
3. You Can’t Negotiate a Repayment Plan
It’s rarely a good choice to file for bankruptcy before you’ve talked with your creditors and attempted negotiating a new payment plan. If you’ve done this, though, and one or more of them refuses to work with you, bankruptcy might be the only good choice you have left. Sometimes, creditors can’t afford to be paid over time and need a full payment sooner rather than later and simply aren’t in a position to negotiate. Other times, they just don’t want to work with you. Whatever their reasons, if they are holding fast to their position, filing for bankruptcy can help you escape them.
Feminomics: Women and Bankruptcy
I was a little nervous when I first started reading Elizabeth Warren’s post: Feminomics: Women and Bankruptcy
Bankruptcy exposes the economic vulnerability and insecurity of middle class women. The women in bankruptcy, like the men who file for bankruptcy, are a fairly representative cross-section of the American middle class. Their education levels are slightly higher than the population generally, with women in bankruptcy more likely to have attended college than their counterparts. Most are employed when they file. They work in a representative cross-section of industries and occupations. More than half are homeowners. By the most overt criteria, the women who file for bankruptcy are, as a group, solidly middle-class. But at the time they file for bankruptcy, their incomes tend to hover only slightly above the poverty level, and they are deeply mired in debt. The women who file for bankruptcy played by all the rules, but they are still in economic freefall.
Ruh Roh! Read more…