File Bankruptcy - Declaring Bankruptcy

In this economy, declaring bankruptcy has been on the mind of many people. With a tough economy looming, many people are getting behind on their credit car payments, mortgages, and car payments. But what are the real consequences for declaring bankruptcy versus trying to work with the lenders?

Whenever a person is late on paying their bills, the best option is always to try to work things out with the creditors. But sometimes, the financial situation that a person has is so dismal, that working with a bank or lender is simply not an option. Of course, most lenders would rather help in any way possible in order to maximize what they will receive from that person, rather than letting the courts decide after declaring bankruptcy.

When a person declares bankruptcy, the court system decides which of the secured lenders will receive whatever is left of the persons assets. However, in tough economical times as we have seen lately, the courts are being more favorable to the debtors than they ever have in the past. But there are many consequences from declaring bankruptcy with the new laws. These are:

Reported on your credit report for a minimum of 7 years

Often cannot get a loan without enormous amounts of equity (down payment)

Depending on which chapter declared, you cannot file again for a minimum of 4 years

You lose complete control of your assets

Possible garnishments or levies

All of these consequences should play into your mind when you decide if declaring bankruptcy is for you. Of course you should always obtain legal counsel before even thinking about bankruptcy. A good bankruptcy attorney will be able to look at your assets and debts and with their experience, give you the best bankruptcy information possible.