the following statement from a fellow student needs a reply to There are a lot m
ID: 2701635 • Letter: T
Question
the following statement from a fellow student needs a reply to
There are a lot more cons of filing bankruptcy then pros. The only pro listed in the reading is that most of your debts are discharged. The cons are that you can lose some of your assets, your credit rating will suffer, and there is a moral stigma attached to it. One of the cons listed actually looks like it should be a pro to me; you may not be able to obtain credit (such as credit cards) for many years. Obviously, credit and debt is what got you in to this predicament in the first place so why should you be able to just get back out there and start building it all over again?
When you take out a line of credit, you are saying that you will pay the creditor back. By filing bankruptcy and not paying back your debt, then you are ultimately hurting more than just the creditor. The creditor has to cover your debt somehow and it could be that they have to raise interest rates of others to make that happen. There are some that use bankruptcy as an easy way out and maybe it should be that we take a tougher stand on bankruptcy laws.
The moral and long term implications for declaring bankruptcy is a case by case basis. I have know people who have declared and some of them genuinely needed it because of an unexpected illness that made them have to stop working (cancer, heart attack, stroke)as well as others that got in over his or her head and just filed bankruptcy to make it all go$$ away. All in all, if you have any other course of action or can plan ahead in case something does happen to you, then it would all be a better option than filing for bankruptcy.
Explanation / Answer
Filing for bankruptcy can also impact future career opportunities. Often, a person who has gone through bankruptcy filing in the recent past is not eligible for consideration as a director in a business. It may also be impossible to hold certain offices in local organizations that would be helpful in furthering the career. The simple act of filing for bankruptcy may diminish the level of confidence that current customers have in the individual or company, and can also put off potential clients who prefer to go with an entity that is more financially stable.
Depending on the circumstances, filing for bankruptcy will also mean losing personal assets. This can include property, the home, cars, or anything else of value that may be seized, sold, and used to partially satisfy the amount of outstanding debt. While this is not always the case, it is possible for creditors to petition the court to take this type of action.
At the very least, filing for bankruptcy means creating more bad credit history. The action will impact a credit score for at least six years and nine months, and possibly up to ten years, no matter how financially responsible the individual becomes after the filing takes place. At best, this means settling for credit that carries an outrageous interest rate. In the worst case scenario, it means an inability to obtain any type of financing for a home or car.
Filing for bankruptcy should always be the last resort. If any other arrangements can be made to pay off outstanding debt, they should be considered before engaging in any type of bankruptcy filing. While other methods may also damage credit rating, they also can help to begin the process of reversing a negative rating and restore a healthy credit score over time.
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