Consumer Law

"Bankruptcy Is No Longer A Doomsday"

By M. Stan Herring

Philly.com has posted an article about why filing for bankruptcy is no longer considered a financial "doomsday." Many people are afraid to file bankruptcy because they don't want to feel they are branded as 'financially ruined' their whole lives.

Bankruptcy actually offers a lot of benefits. For example, even though bankruptcy stays on one's credit report for 10 years, it offers those deeply in debt a fresh start while still usually keeping their most important assets. Bankruptcy lawyers have even said that people who are serious about putting their lives back together after bankruptcy can even get a home loan in two or three years. They can also get credit cards, but the interest rates are much higher.

Even though it's possible to rebound rather quickly from bankruptcy, it's still important that you consider other options before filing, such as trying to work out payment agreements with lenders.

With 15 million people jobless and about one in four homeowners underwater on their mortgages, many people have learned that charging today on the belief that they can pay tomorrow is a dangerous trap. Following a lull in bankruptcies after Congress tightened rules in 2005, personal bankruptcies are increasing. According to the U.S. government, about 1.5 million Americans filed for bankruptcy in the 12 months ended Sept. 30, a 14 percent increase over the number who filed during the 12 months ended Sept. 30, 2009.

And studies show "people are in worse shape than ever" when they file, said Robert Lawless, who teaches bankruptcy law at the University of Illinois at Urbana-Champaign. Too many people wait until it is too late "and suffer more than they need to," he said.

If a lender threatens to seize your home or car, it's a wise move to talk to an experienced bankruptcy lawyer. Talking to a debt counselor can also help you determine if your debt is manageable by living on a strict budget, or if bankruptcy is your best option.

If bankruptcy is your best option then it's important that you not wait too long to file. Once you file, only the debts you have had up until the point of filing are relieved. Credit card companies might cancel your card since you filed, but other companies will bombard you with offers because you can be considered a "safer risk" now that your debt is wiped out or significantly reduced. These new credit card offers may be tempting, but remember debt acquired after filing bankruptcy isn't included.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

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Full post as published by Alabama Consumer Blog on March 13, 2011 (boomark / email).