Bankruptcy Has Seven Disadvantages

Two types of bankruptcy exist: Chapter 7 and Chapter 13. Chapter 7 means that all your assets are taken and sold. Afterward, you will own absolutely nothing. However, you will have no more bills. Chapter 13 means that your payments are regulated by the court to pay off your lenders, for up to five years. But, you are allowed to keep some assets such as a car or a home. For this, your paycheck and/or other income is usually garnered.How does it hurt my credit?Once you have filed for bankruptcy relief and it is approved by the courts, the blemish, one of the worst, can appear on your credit report for up to 10 years. From that time on you will have trouble obtaining credit and when you do get credit it will have very high interest rates and very stiff repayment terms.How will I get a new credit card?After bankruptcy, the best bet for getting a credit card will be to arrange for a secured credit card with a bank or a credit union. You will deposit an amount of cash with that institution and that will be your spending limit. Meanwhile, you will have to pay for your purchases on the secured credit card on a timely basis and you will bear a rather high interest rate. It may be hard, but this will ultimately help your credit scores even after bankruptcy.Does bankruptcy cost money?First off, being bankrupt, you do not have much money anyway. To proceed through bankruptcy, you need the benefit of an attorney. This can cost $1,000 or more. You will also be liable for filing fees and other money that will be needed.Is bankruptcy really a shame?Embarrassment is a large part of bankruptcy. It will seem like the whole world knows about your profligacy and lack of responsibility. The bankruptcy court and your lawyer will know everything about your personal life and your wild spending habits. If you have just had bad luck, they will know that you were not smart enough to save money for a rainy day.How can bankruptcy affect me personally?Many marriages and friendships have been lost during the proceedings to bankruptcy and at the bankruptcy itself. Getting time off to go to bankruptcy court can be humiliating. Just the onus of being labeled a Bankrupt Person by friends and family is very hurtful. Bankruptcy can mean a lowering of your own self-esteem and may lead to clinical depression.How will it affect me right after I file?After bankruptcy, you will be basically penniless. You will be making your own lunch. You will be having top ramen for dinner. You will not be able to purchase the smallest pleasure. Friends often become distant.Is the number seven unlucky?As you can see, seven is not a lucky number for people who seek bankruptcy relief. Though you may be relieved of bills and the burdens they require, you will have other burdens to bear. Though it is not the end of your life, it is something to be avoided. Your focus should be on reestablishing your credit worthiness, long-term savings, emergency savings, and forgetting about a wild, spending-on-credit lifestyle.