The idea of being freed from debt can be appealing. Bankruptcy will provide you with legal protection from your creditors and take care of all or much of your debt. There is the chance you will get to keep your home and car. Bankruptcy will also stop wage garnishment, debt collection harassment and similar creditor actions to collect debts that you owe. It can also stop foreclosure on your home, and help restore or prevent shut-off of utility service.
Second of a four-part series
In other words, bankruptcy can "put the brakes on" if you are headed for financial ruin. By wiping out your old debts, you are likely to be in a better position to pay your current bills.
While bankruptcy may provide you with a fresh start, your new journey comes with a price tag and no written guarantee. In other words, there is no guarantee you will have a successful future after filing bankruptcy because it does not cure all financial problems, such as:
• You probably will not be able to stop "secured" creditors (those that financed your car or house) from collecting money from you.
• You will still be obligated to pay child support, alimony, most taxes, most student loans, and criminal fines.
• You will be responsible for any debts you incur after you file for bankruptcy.
You can expect the bankruptcy to have a negative impact on your credit history for several years. It also means that your ability to obtain credit will be affected, as will the cost of that credit.
Furthermore, you may have to pay some of your debt and/or return collateral to creditors. You may lose your house and your car. The bankruptcy becomes a matter of public record and remains on your credit record for seven to 10 years.
Everyone's financial situation is different. Many times consumers assume that their problems are worse than others, or worse than they really are.
Whatever your emotional or financial situation, it makes good sense to seek alternatives before taking the major step of bankruptcy. Looking at your options may give you a brighter outlook on your financial future. It may provide you with needed confidence and a plan of action to solve your problems without going to court.
Letters and questions can be addressed to the BBB at 330 N. Wabash Ave., Suite 2006, Chicago IL 60611. For company inquiries or complaints, 24 hours a day, telephone (312) 832-0500 (cost: $5 per call, credit card only). Consumer consultants are available from 8 a.m. to 6 p.m. Monday through Friday. The BBB Web address is www.chicago.bbb.org.