Have you been considering filing for bankruptcy but are worried about the impact that it can have on your life afterward? Bankruptcy is a very powerful financial tool, and while it can have a negative impact in some ways, the benefits that it can provide are usually well worth it. Here is how you should expect bankruptcy to impact your life.
You'll Discharge Your Debts
The most obvious benefit of using bankruptcy is that many of your debts are going to be discharged, so you never have to worry about paying them back again. Creditors are not going to be able to contact you about them, and you will not have a legal obligation to pay creditors the money that you owe them. This is going to allow you to get the fresh financial start that you need, which you would not otherwise have without bankruptcy.
You'll Have Difficulty Borrowing Money
The main thing to be aware of is that bankruptcy is going to damage your credit for a while. This usually means that you are going to have a problem borrowing money for things that are out of your price range, such as a home or a vehicle. If you do not have a need to borrow money in the near future, you may not even see this downside of filing for bankruptcy.
You'll Have Higher Interest Rates
If you are able to borrow money, it will likely be at a higher interest rate than you have paid in the past. One of the reasons that credit card companies charge a high-interest rate is because they are accounting for the people that will use bankruptcy and not pay back their debts. If you are given a low-interest rate, it is because you are viewed as a safety risk due to your credit history. However, people that have gone through bankruptcy will be viewed as a much higher risk. You'll discover that your interest rates are often much higher because anyone lending you money is going to assume that you are more at risk of not paying back the money that you owe.
You'll Need To Use Cash More
Cash is going to be necessary to get you through the period after successfully filing for bankruptcy. Even if you are able to get a credit card, you'll often need to use a secured credit card. This means that your credit limit is based on how much cash you've given the credit card issuer so that they can use the money if you don't pay your bills. So even if you use a credit card, it requires cash to do so.
For more information, contact a bankruptcy attorney.