Bankruptcy can bring relief to individuals with financial crisis, but it does have a lot of disadvantages as well! It hampers the credit report; once bankruptcy is filed it remains on the credit report for the next ten years. During this period of time it is difficult to get credit from the banks, even though one gets the credit, the interest level is very high.

Following are some of the advantages and disadvantages of filing a chapter 7 bankruptcy which is among the most commonly filed:

Advantages:

• Debt amount is not specified
• Any wages earned after bankruptcy can be kept by the debtor
• Any unpaid balances due after assets have been distributed are discharged
• Most cases are discharged within 3 to 6 months

Disadvantages:

• The non exempt property is sold by the trustee
• It only temporarily stops foreclosure
• All debts are not discharged.Ex (Child support, taxes, student loan)
• Trouble for the Co-signers
• Once filed, withdrawal is difficult
• Damages credit rating
• Can be filed every six years

Filing bankruptcy offers certain advantages and it may be the right choice however, before deciding to file bankruptcy you should be familiar with the advantages and disadvantages of chapter 7 bankruptcies

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Bankruptcy is by far the best option to get out of financial crisis as the bankruptcy laws protect the individuals from getting any more threats from the creditors.Inspite of this they are extremely concerned about their credit ratings. People struggle and try to stay as current as possible. It nearly takes a decade to build up a good credit score.

Although the creditors are willing to work with the debtors, they probably will destroy the credit score, by showing multiple late payments. Filing for bankruptcy actually improves the credit score because the balances on the outstanding debts are wiped out or discharged.

Bankruptcy stays on the file for nearly 10 years, so it is very difficult to obtain credit from any bank or creditors and even though he gets a credit, the interest level is very high.

Lenders look at the way you have paid your bills in the past as an indication of how you will pay your bills in the future. A bankruptcy is an adverse rating in this respect, but creditors can also see how your credit was before the circumstances which caused the bankruptcy. If you had a good credit history and paid your bills on time before the bankruptcy, you may find that it is easier to re-establish credit than if you were perpetually behind on your payments and had judgments against you.

Many people go to the bankruptcy lawyers to get an idea of how bankruptcy laws work. They are well aware that once bankruptcy is filed there will be no threatening calls from the creditors, which is an added advantage, but they are equally concerned about their credit report and try their best to keep their credit reports up to date.

Bankruptcy is one of the most complex or specialized area of law. As the issues are not always simple or apparent, a lawyer should be chosen in such a way that he can work according to the consumer

Bankruptcy, a court based procedure gives one the opportunity to start afresh financially, although it leads to the loss of self esteem. Federal laws introduced with effect from the 17th of October 2005 have made filing for bankruptcy more stringent.

A set of procedures are involved throughout the proceedings from start to the end. All the financial documents should be placed in order including the list of the income

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• Pay stubs
• Contract payments if any
• Interest payments
• Annuity payments
• Settlements if any
• Tax refunds

There can be other source of income as well for the customer which includes personal property with its value like

There are basically two types of bankruptcy that one can file-chapter 7 and chapter 13.It is very important to understand the after effects of bankruptcy before one files it. This means that one has to qualify for in order to file a chapter 7 bankruptcy, because this requires liquidation of debts. This is done mainly to avoid any type of fraud and abuse and another most important thing is that there should be a bank attorney to fix out things in the right way. Following are certain points which are required to be kept in mind before filing bankruptcy:

Eligibility: One has to pass through different tests to qualify for the bankruptcy program that has been discussed earlier .There is a lot of calculation to be done as the state laws apply differently for the different states.

Whether or not bankruptcy had been filed before: It is very important to find out whether bankruptcy had been filed before or not, because once chapter 7 bankruptcy had been filled, one cannot file another bankruptcy for the next 8 years, there can be a conversion to chapter 13 bankruptcy, and then to chapter 7 but there also the eligibility factor applies. It is therefore important to note that it would lower the credit score because; both the chapter 7 and chapter 13 bankruptcy will appear on the credit report.

Non dis chargeable debts: There are apparently 2 types of debts, obligatory or non dis chargeable debts and the dis chargeable debts. Obligatory or non dis chargeable debts include child support, alimony, income tax and student loan. It is useless to file a chapter 7 bankruptcy as with these kinds of debts, as these debts will remain as usual even after discharge.

Non Exempt Property: There are two types of property, mainly exempt and non-exempt. In chapter 7 bankruptcy the non-exempt property is at risk of liquidation. So, it is important to evaluate as to how much of the property is at risk, before filing for bankruptcy.

Take care of your co-signers: One should take care of their co-signers or the people who are held liable for the debts, because although some of the debts will be discharged the co-signers will still be held responsible. It is a fresh start for the individual, but the co-signers will still be held liable for the debts.

Although bankruptcy does solve a lot of problem for people in distress, still one should know how to take care of the things that should have been taken care of before filing bankruptcy. It might be advantageous for one but non advantageous for the others, so we should always try to find the alternative to bankruptcy.

On the declaration of bankruptcy, a fresh start is gained by the debtors, especially with a chapter 7 bankruptcy. The most important thing that is to be taken care of is to rebuild a bad credit report after bankruptcy or else it would affect the customers to get any sort of credit from the banks or from the creditors in the long run.

It is difficult to get any sort of credit from the banks, as the bankruptcy details still seems to be there on the credit report. There are only a few banks that would lend you otherwise!

There are certain debts which cannot be discharged even after bankruptcy, if it is a chapter 13 bankruptcy, payments should start as soon as one is in a position to gather some savings, and this also helps to build a good credit report. One should be careful enough to check the credit reports regularly.

Another important step is to take care of is the monthly expenses. It is essential that one should follow a proper budget, and take care of their monthly savings for emergency, as it is difficult to get loans after filing bankruptcy. It is not wise to take loans from elsewhere as they can charge a high rate of interest. Some banks can provide small amounts of loans of $500 or $1000; these banks can probably be of some help as the amount is low and interests are affordable.

If debts are managed on time, there can be good savings and the debtor can be qualified once again with a good credit score to be eligible for credits.

Conclusion- It is difficult to deal with a damaged credit, but there are ways and means to get out of it. One should ensure to rebuild his own credit by saving as well as by planning out his own budget and also by following some of the steps mentioned above.