Spring is around the corner and as people being so use up their early tax returns we expect to see an increase in the requests for Personal Loans. Some of these loan applicants will unfortunately end up included in some kind of bankruptcy regardless of how much we try to identify the higher than average risk before loan approval. Between bankruptcy attorneys advertising to have borrowers seek this way out of debt and consumers getting into more and more debt, it is very tempting for borrowers to use and sometimes abuse bankruptcy as a way to alleviate the pressures of debt. However, is bankruptcy a great option if you are concerned about your financial future? Ever wondered what are some of its negative effects? To answer some of these questions, below is a blog from The Phoenix Group, https://thephenixgroup.com.
How To Avoid Bankruptcy
Stated by credit repair companies in Dallas, bankruptcy had a negative stigma associated with it and most people resorted to declaring bankruptcy as an absolute last resort. However, today the stigma of bankruptcy has mostly gone away, and now it’s viewed as an acceptable and quick way to deal with debt.
Even with the stigma removed, however, you should strive to avoid bankruptcy at all costs because of the damage it still does to your credit and your financial and professional future.
Here are the adverse effects declaring bankruptcy has in store for you.
To say that bankruptcy nukes your credit is an understatement. Experts say bankruptcy can be a black mark on your credit that lasts for 7 to 10 years, which means getting any kind of unsecured loan is near impossible.
Not only does this black mark stay on your credit for an extended period of time, but if you do need a loan, the only option you’re likely to have are loan sharks who are going to charge you off the charts interest rates. Also, with a bankruptcy on your credit, you will even have a difficult time getting a secured credit card.
Lost Job Opportunities
So, if having your credit destroyed for up to 10 years isn’t bad enough, consider the fact that many potential employers look at an applicant’s credit history before deciding to hire. According to selflender.com,
“Unfortunately, while federal laws prevent discrimination in the workplace regarding race and gender, no such laws exist to prevent being denied a job due to poor credit history.”
And according to some experts, even if you have a stellar track record with previous employers and a high education, potential employers are likely to overlook these because of your bankruptcy, which paints you as a person who can’t be trusted or as someone who is irresponsible.
Strains Personal Relationships
If you’re married or living with your partner and sharing expenses, your bankruptcy is going to affect your household finances negatively. This is likely to put a strain on your relationship if your significant other is pulling more of the financial weight than you’re able. And, as mentioned, it can take years for you to rehabilitate your credit to be considered in good standing and to where lenders will take the risk, and many people can’t or don’t want to wait that amount of time.
You Still Owe Money
Bankruptcy doesn’t discharge all of your debts, and if you owe child support, alimony, or tax debts, you’re still on the hook to pay those. So you will still get mail from debt collectors like Ad Astra Recovery Services and GC Services to name a few. Also, student loan debt and income tax debt will have to be paid back unless you can make a case to the court as to why you shouldn’t have to pay them.
For many people, bankruptcy is the only option when they’re under a mountain of debt, however, for too many, it’s seen as an easy way out, but it’s one that comes with heavy and lengthy consequences.