Many people scowl at the thought that they might have to file for bankruptcy shelter. We tend to associate bankruptcy with those people who just spend without thinking and purchasing excessive unneeded things. Then there is the inevitable result which is the damage inflicted on the credit report after you have filed for bankruptcy. Just because bankruptcy can affect your credit score, it does not mean that you should deflect bankruptcy if your financial position warrants it. Filing for bankruptcy shelter is your legal right, and under the right circumstances, you should surely take advantage of it. Under what financial situation should you seek bankruptcy shelter?
It will be nice if there is a certain rule that dictates when you can or should file for bankruptcy shelter. You can choose to apply bankruptcy at your own discretion and depending on your personal life at the time. If you can survive the next 3-5 years without filing for bankruptcy, then bankruptcy is most likely not for you.
Can you live a profound life in the next 3-5 years and still pay back the creditors?
If you can pay back your creditors within 3-5 years and still afford to pay your typical expenses such as food, shelter, car payment, then you should take the route to pay down your debt. If you have give up on the necessities in life, like food and shelter, in order to pay back your creditors in 5-10 years, then you should consider filing for bankruptcy.
This whole idea can be better explained with a concrete number demonstration. Hypothetically you have accumulated over $50,000 in credit card debt. Credit card companies always charge some kind of interest for lending the money to you upfront. In our example, the credit card charges an interest charge of 20% APR. Given this data, we can presume that you are paying back $500 per month and that will help you to pay off the credit card debt in 8+ years. If there is no way for you to part with $500 per month for the next 8+ years, then this is the time that you should think about bankruptcy. In this scenario where it is next to impossible to pay back the debt, and your alternative is to apply for bankruptcy protection, then you should save the $500 per month that you were planning to pay back the creditors for future use. Do not hesitate to seek help with bankruptcy just because you worry about your credit history. Currently your credit history is already not the most ideal, so why not take benefit of it and start anew with totally no debt under your belt?
Do not let the thought that your credit history will be ruined deter you from filing bankruptcy. It is altogether possible to have even better credit score post bankruptcy if you stick to a right plan to help you reestablish your credit. If you abide by the rules of debt management properly, you can emphatically reestablish your credit score back up to high 600s or low 700s post bankruptcy. Lenders are forgiving to their clients' plight, and as an example, you can even qualify for a FHA home loan 30 months after you have filed for bankruptcy. Filing for bankruptcy is not the end of the world for you, it is just the beginning. If your finances are in a bad shape and you need assistance filing bankruptcy, your best option is to talk to a bankruptcy attorney. Just because you have made mistakes in the past does not mean you will continue to do the same thing over and over again. Apply for bankruptcy if you need to, and make sure you will become financially responsible for the rest of your life.