Bankruptcy

Bankruptcy should be the last move to make if you get in over your head.

A bankruptcy remains on your credit report for 10 years and can seriously hinder your future ability to get credit, a job, insurance rates or even a place to live. Normally, it is not until years after a bankruptcy discharge that consumers are eligible for mortgage loans, but those with higher rates.

Some of the other disadvantages of bankruptcy to consider are:

  • It's not an easy way out. Filing for bankruptcy is no guarantee that it will be granted because a court judgment must be made. Even if all you do is file your bankruptcy papers with the court, it still gets reported on your credit profile.
  • Not all debts are included in bankruptcy. Things like alimony, child support, student loans and taxes secured by liens must be paid consistently.
  • Greater difficulty purchasing or renting a home without a substantial down payment.
  • Greater difficulty obtaining a checking account.
  • Bankruptcy filings can be very lengthy in process – in some instances, they can disrupt your personal life for several months.
  • A credit card or debit card is a necessity for conducting your normal business activities and they may be difficult to obtain without collateral – and also come with a higher interest rate.

Tools and resources

Mpowered: Bellco has partnered with Mpowered, a local nonprofit, to offer U.S. Trustee-approved affordable bankruptcy counseling and certificates. Mpowered also provides alternative solutions to bankruptcy, including debt management plans and financial coaching.