So you're considering bankruptcy? The current credit crunch has made things tougher for many Americans who were already getting pinched by the tight economy these days.
Usually bankruptcy is a last-resort if you've found it impossible to pay your bills on time. With creditors calling non-stop, bills mounting and no solution in sight, filing for bankruptcy may be a good option.
About Bankruputcy - Some Quick Facts You Should Know
In the middle ages, creditors broke the benches, or trade counters of Italian merchants who were unable to pay their debts. (The word "bankrupt" comes from banca rota, meaning bench-broken.) Early Romans and Greeks took debtor's wives and children and sold them into slavery. In England, failure to pay debts was, as late as 1870, viewed as a crime, imprisoning those who couldn't pay their debts.
Luckily all these practices are over. Today's bankruptcy laws are designed to grant bankrupt persons a fresh start as self-supporting citizens. Further, many laws have been made to protect the debtor from overly aggressive collection tactics and out-right harassment by your creditors.
Far from being a crime in today's World, a bankruptcy will, in most cases stop creditors from calling you. Beyond this, a bankrtupcy frees you from paying all or part of the debt you owe.
Bankruptcy and Your Credit: A bankruptcy does not, however, free you from a bad credit history.
Do not mistake a bankruptcy as a method to for you to clear credit items from your report. Unfortunately many people believe that a bankruptcy acts like an eraser on their credit reports - when quite the opposite is true.
So understand this: All your bad debts will remain visible to anyone who looks at your credit report. Further, they will be able to see that you did not pay them back and that you filed for bankruptcy.
Is Filing Bankruptcy Worth It? Should I Consider Other Options?
A bankruptcy will further devastate any credit report that was less than perfect before the bankruptcy itself. In other words, it is much easier to repair a credit report that does not contain bankruptcy listings.
If considering a bankruptcy, it is crucial to remember that any accounts you include in your bankruptcy will be closed, and you will not have access to those lines of credit. Further, if you try to secure new lines of credit after filing bankruptcy, many lenders will not look past this listing to determine you as being worthy of credit.
Remember, bankruptcy is a last resort, to be entered into carefully, only when all other avenues have been unsuccessfully attempted. Often, credit repair companies can offer assistance in negotiating with persistent debt collectors.
When a debt is late, creditors are often more than willing to accept a percentage of the original debt in order to close the account. How little they will accept, and how they will report the debt on your credit report are all up for negotiation.
Credit problems can seem overwhelming and tiresome. Creditors know this and will pursue you relentlessly, attempting to wear you down in an effort to make you pay. Because of this, situations are often not as bad as they seem.
Stay positive and be persistent. You will discover the right solution!
