When it comes to bankruptcy, there are a lot of myths and misconceptions out there. Some people believe that filing for bankruptcy means that they will never be able to get credit again or own a home. Others think that all of their assets will be taken away.
The truth is, bankruptcy does have some long-lasting effects, but they are not all negative. The vital thing is that you understand the cost of bankruptcy and its implications on your future before you decide to file. Many people who have filed for bankruptcy say that it was one of the best things they ever did.
Here are some of the long-lasting effects of bankruptcy:
- You will have to rebuild your credit
It is probably the most well-known effect of bankruptcy. Your credit score will take a hit when you file, but that does not mean you will never be able to get credit again. Many people can get new lines of credit and even mortgages within a few years of filing for bankruptcy.
The key is to use credit responsibly after bankruptcy. Make sure you make all your payments on time and keep your balances low. If you do this, you will be able to rebuild your credit score and eventually get back to where you were before you filed.
- You may lose some assets
When you file for bankruptcy, you may have to sell some of your assets to pay off your debts. It is called liquidation. Most people who file for Chapter 7 bankruptcy have to give up some of their assets.
- You will have to pay some debts
Although bankruptcy will discharge most of your debts, there are some that you will still be responsible for. These include things like child support, alimony, and student loans. You will also still be liable for any debts incurred through fraud.
- It will stay on your credit report for 7-10 years
No matter what type of bankruptcy you file, it will remain on your credit report for 7-10 years. It can make it challenging to get credit during that time. However, as we mentioned before, if you use credit responsibly after bankruptcy, you will be able to rebuild your credit score and eventually get back to where you were before you filed.
- You may have trouble getting a job
While it is illegal for employers to discriminate against you because you have filed for bankruptcy, some may still do it. It is especially true if the job you are applying for requires a security clearance or involves handling money.
- You may have to wait a while before you can file again
If you choose to file for bankruptcy again, you will have to wait a particular time before you are eligible. For Chapter 7 bankruptcy, you will have to wait eight years. For Chapter 13 bankruptcy, you will have to wait two years.
Filing for bankruptcy is a big decision that should not be taken lightly. You should be aware of some long-lasting effects before you decide to file. However, if you are struggling with debt, bankruptcy may be the best option. If you would like to learn more about bankruptcy and its effects, don’t hesitate to contact a bankruptcy attorney in your area.