Things to Know Before You File For Chapter 7 Bankruptcy


It is important to know all of the facts before you file for chapter 7 bankruptcy. Many people think that filing for bankruptcy is the only way that they can get out of their dreary and dire financial situations. However, filing for bankruptcy should only be done as a last resort.

Filing for bankruptcy negatively impacts your credit rating for seven to ten years. This means that it will be very hard for you to get any additional lines of credit in the future, like Visa, MasterCard, gas credit cards, etc. With a bankruptcy on your credit report, don't even waste the postage to try to get an American Express or Diners Club card. The bankruptcy filing can also make it difficult for you to rent an apartment or take out a mortgage to purchase a home. Most consumers do not fully understand how creditors assess consumer credit ratings, but a filing of this magnitude stands out like a sore thumb.

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When creditors look at your credit score, they look at your total amount of debt, credit lines available, and any missed payments. The part that always ends up denying consumers lines of credit are items that are in collection and bankruptcies. These two things are big turn offs for potential creditors and they will deny consumers regardless of their incomes.

If you are considering filing for chapter bankruptcy then you should meet with a bankruptcy attorney before taking any further action. The bankruptcy lawyer may give you a free bankruptcy evaluation. They have the experience and expertise to be able to evaluate your financial situation. They can also explain to you the bankruptcy laws as they apply in your state and to your particular situation. This will help you make a more informed decision.

The attorney will be able to tell you if maybe taking an alternate route such as a debt settlement might help you rebuild your credit rating. Most consumers think that they either file for bankruptcy or they will never be able to have financial freedom. This is not the case; many consumers have filed for bankruptcy without talking to a qualified attorney first, but studies have shown that virtually all of them, if they had to do it over again, would have used a lawyer to cut through much of the red tape as well as better understanding their options.

Homeowners who are deep in debt may be able to take out home equity lines of credit to pay off their debts and avoid bankruptcy. Why hurt your credit for years when you can find alternative ways to avoid filing for chapter 7 bankruptcy?

Before you file for chapter 7 bankruptcy, please explore all of your other possible financial options. You can usually only file once within a seven year period, so you really need to be fiscally responsible and try everything to avoid needing to go through the process a second time. If you want to save your credit score then do yourself a favor and get a free evaluation from a bankruptcy attorney, what have you got to lose?


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