Personal bankruptcy can be a terrible situation to find yourself in, and you never want to be in that position. Unfortunately, it happens to millions of people every year, with many more considering filing bankruptcy but choosing not to because they don’t know the repercussions of doing so. To help you avoid personal bankruptcy, we’ve compiled five reasons why you should avoid personal bankruptcy at all costs. Check out these reasons below and make sure you have a personal bankruptcy attorney on your side if you’re thinking about filing for bankruptcy any time soon.
1) It will negatively affect your credit score
Even if you’re able to keep up with your bills after filing, there’s no getting around the fact that bankruptcy is a negative mark on your credit. You may encounter higher interest rates when you borrow money in other areas of life because of bad credit.
2) It takes years to clear
Your credit report will be affected by bankruptcy for seven to ten years. This could affect your ability to buy a house or car, rent an apartment or get a job. The stigma attached to bankruptcies can also make it difficult to maintain relationships.
3) Foreclosure isn’t always avoidable
Foreclosure can occur when you’re unable to pay your mortgage. When your lender forecloses, they have a legal right to seize property you owe them and re-sell it to recoup their losses. Despite most foreclosures being preventable, certain financial situations can make it nearly impossible for people to avoid them.
4) The IRS will come after you
If you can’t pay your taxes, and you don’t try to work out a payment plan with them, they will pursue all available means to get their money, including garnishing your wages.
5) Your assets might be seized
The first thing to consider when deciding whether personal bankruptcy is right for you is what assets you have that may be seized by creditors. If you own a home, car, or another large asset, it’s possible that your creditor will try to seize those items in order to pay off your debt.
In conclusion, personal bankruptcy is something that you should avoid like the plague. It will ruin your credit and put you into a financial hole that you may never be able to climb out of. I hope these 5 reasons have helped you realize just how bad it can be for your finances if you file for bankruptcy. If not, please feel free to ask any questions in the comments section below!