July 26, 2022
Avoiding Bankruptcy

Avoiding Bankruptcy

The Pros and Cons to Avoiding Bankruptcy

The best advice for avoiding bankruptcy is to be financially conservative. With 70% of Americans living paycheck to paycheck and credit card debt at an all time high the biggest financial decision most people make is whether to pay a bill or not. As the government’s debt has skyrocketed to over 300% of the GDP, and continues to rise at an alarming rate, bankruptcy is no longer an option.

Home foreclosures are still at record highs, car repossessions are at record highs, and the average credit card debt households are at an alarming 15,000$. Bankruptcy can often times not keep up for the families of the victims, as many families lose their homes and other belongings to foreclosure and bankruptcy proceedings. Much worse, many people do not file bankruptcy for the sole reason that they are afraid of what their credit score will show in the months following filing. The reality is that after a bankruptcy the credit score is virtually unaffected.

Another common fear is that someone’s reputation will be sullied by the person who files bankruptcy, and that employers or landlords will hesitate to hire people with low credit scores. While it is true that social stigma and fear tend to exist, the same prejudice exists amongst creditors and the lending and hiring community. Bankruptcy is not looked on as a negative thing, in fact it is quite the opposite. It actually helps many people regain financial stability in that they are no longer drowning in debt with no foreseeable or practical way out. Where there have been much misunderstandings is that the threat of bankruptcy tends to scare creditors off. This is not an accurate assessment of how the process works, as the vast majority of the protected debts are always discharged in bankruptcy, and serve as the proverbial “imonth” in many financial stories. Avoiding Bankruptcy

Larger purchases such as a home or a car will be much more affordable with a viable credit score following the bankruptcy process. This does not mean that a person who has the proper education, work history, and financial security will be able to get a house with a moderate mortgage within two years, it simply means that the risk of default the lender is willing to move forward. When it comes to a car, the same would hold true. Unless you are super rich, if you cannot afford to purchase a reliable vehicle you will be able to afford a newer vehicle with relatively equal monthly payments. This usually involves a trade-off between lower monthly payments and lower gas consumption for lower payments.

Employment is also another obstacle that ends up getting effectively dealt with in bankruptcy, at least from traditional employers. This is because retail and retail positions generally perform under the credo “no employees means no money” and so bankruptcy would make it difficult to hire out a person. However, certain jobs in the legal fields or positions in the government that tend to be held bythink wealthy Die-hard strengerat work for 25 years(often well over $50,000/year), are more likely to hire people with a bankruptcy stain on their record. Avoiding Bankruptcy

Bankruptcy should be avoided if at all possible, as the psychological damage can be extreme. But if it has to be done, at least you willewithout some of the negative social stigma, worry, and anxiety.