Bankruptcy may seem like the only way out of some situations, but you should consider what it will cost you. Sometimes, these costs will lead you to look for another solution.
And I’m not just talking the costs for filing the bankruptcy. You will pay the filing fees and most likely need a lawyer. These filing fees have gone up as part of the Deficit Reduction Act.
If you make changes to your case or proposals for added actions, you will pay more. And you will have to avoid missing records and bad checks to keep from adding to the bill.
In general, just filing for bankruptcy will cost you in nine ways: you will pay the attorney, the credit counseling, the petition fees, the amendment fees, the reopening fees, the conversion from a Ch. 13 to a Ch. 7, the splitting fees, the abandonment of property and the withdrawing the reference fees. Goodness.
But you will pay much more than just for those items.
From the next decade, you will pay higher interest rates on any loans you are able to secure. If you want to buy a home, you will probably have to shop the subprime market, which automatically means higher interest rates.
You will also pay higher insurance premiums as insurance companies look to your credit history for the potential of claims by you. The worse your credit, the more likely you are to have a claim and the higher your premiums.
You may have to sell your existing home, cars and belongings to settle your debts. You may find that even after your debts are fulfilled and your credit history on the way to repair, you will be unable to secure credit from your previous lenders. They keep the information on file.
Bankruptcy isn’t something to be taken lightly. It will cost you a lot of money and sleep. If you are able to find a way to avoid it, you should. Under the new law, you will have to attend credit counseling to be able to file for bankruptcy. You will have to pay for this, usually $50 a session.
So why not go ahead and sign up for a credit counseling program before you file. You may find options that help you avoid the bankruptcy process. When you have no where else to turn, it is a good option that may help you find a solution. But you have to be dedicated to turning your finances around.
Bankruptcy is something that is hard to recover from, both emotionally and financially. There are good people that have to file for bankruptcy. They simply run into bad luck, such as job losses or illnesses. I’ve had people tell me that you never quite get over it. It can be a blow to your pride. You will fear that it will happen again. You will make your decisions different in the future.
So look at bankruptcy not as a way to start over, but a long pause in your life. Everything will change. You should try to avoid it. Start over by getting your finances in order before bankruptcy is your only option. Work to get out of debt. It is worth the sacrifices you may make. The cost of bankruptcy is just too much to be a temporary fix for your problems.
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