In considering this process you need to ask yourself the question, should I file bankruptcy? Especially if you are currently knee-deep in credit card or consumer debt, are getting knocks on the door from your creditors or simply see no way of raising any money.
The fact is that you are probably stressed out and part of you wonders if filing for bankruptcy isn't somehow easier than all of the pain you are currently going through.
In reality there are times when bankruptcy can be a good idea, but it is not the "Get out of Jail Free!" card that people would have you believe. There are some major drawbacks to filing for bankruptcy, especially if you either don't own a home, or would be a first-time buyer, and the question, should I file bankruptcy? has hidden dangers.
The first of these is that filing for bankruptcy and the bankruptcy process puts a permanent blight on your credit score. And that means that in the eyes of any financial institution you go from being someone that they actively court to do business with, to someone that they will treat something akin to the lepers in ancient times.
You will be shunned for any kind of credit, including not only consumer items, which you can probably live without. But for really big purchases like your first home, and it is highly unlikely that you will be able to get a mortgage to purchase a home.
So, unless you happen to win the lottery and can pay for a home in cash, you are highly unlikely to be able to get credit.
Even if, by some miracle, because that is honestly what it would take, you DO manage to get a mortgage, then the interest rate that will be charged will more than likely take your breath away.
If you have filed bankruptcy in the past then your very first step must be to get a hold of your credit file.
By law in the United States the big credit rating companies have to provide you with your credit file once per year free of charge.
So once you have got a hold of it then you need to start actively taking steps to boost your credit score by taking active measures.
Get any kind of credit card that will have you, and then make just one transaction a month on it, and pay it back in full every month. This starts to re-establish your credit history and help you to move on from the thought of bankruptcy process.
Considering repairing your credit first? Be sure to check out How to do it Yourself Credit Repair for several suggestions to improve your own credit.
Looking for more answers? Have a Question is a forum designed to get your questions answered. Don't hesitate to ask away!
Disclaimer:This information is not provided for legal advice or opinion, but is for general information only. Since laws vary from state to state, seek the help of a professional in your area for any legal advice.
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Aug 05, 19 10:44 PM
Hi Help please! I am a first time home buyer, buying a home with my fiance'. He is selling his home currently on the market for $125K with no contingencies.
Apr 15, 19 12:36 PM
When buying a home out of state, should we wait for employment contracts? Or can we use our current state's bank? Find the answers here.
Apr 15, 19 12:13 PM
Will bankruptcy affect my mortgage approval? Can I still buy a home? Find the answer to these and more on this page.
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