SHOULD i FILE bANKRUPTCY?
Starting over and getting debt free is the perfect solution for getting you future life back on track. Deciding whether or not to file bankruptcy is a major choice, and one that can be confusing if you've never gone through it before. Knowledge is power however, and a little background can help you make an informed decision.
HISTORY
Bankruptcy law was one of the first laws passed in America 200 years ago. Why? Because our forefathers came from England and in England if you owed money, they would throw you into debtor's prison until your family and friends could raise the money to pay off the creditors. In their wisdom the founding fathers decided to let our hardworking citizens have a single chance to get out of debt with a single bankruptcy. It formally was only available once in a lifetime and this allowed their fellow citizens a chance to work and become successful. It helped everyone grow and prosper.
CREDITORS LIKE IT WHEN YOU FILE BANKRUPTCY
Creditors like it when you file bankruptcy. Yes, they do not mind at all. They get to write the entire debt off their profits, so they pay lower taxes. Otherwise they would have to comply with strict credit collection laws and generally would have to turn the debt over to third party collection agencies at a minimum cost of 50% of the debt. Once the debt is collected, usually several years later, they would then have to pay taxes on the money they collect. This is very costly and time consuming for the creditor, where as when you file bankruptcy, the debt is instantly turned to a tax saving profit. There is no need to feel sorry for the creditors, they a profiting on higher interest charges to everyone because they use the bankruptcy issue to keep the interest rate higher than they should charge and say it’s because of bankruptcy filings. Don’t forget they have collected many times the profit against all their clients even the many who never file bankruptcy and pay off their debt.
WHEN NOT TO FILE BANKRUPTCY
Although everyone can file a bankruptcy, it is our experience that some people to seriously consider not filing. Bankruptcy does affect your credit. To be blunt, you have no credit just after filing. And this lack of credit becomes an issue at certain times of your life. If you are in your early 30’s and have less that $10,000.00 in debt, suck it up and pay off the debt. At this time period of your life you will be getting married and must support a family, you will want to buy a house, finance that second car for your spouse, have many unanticipated expenses with your children including school and unfortunately medical bills. This is not the time to take away the ability to borrow money when these unexpected debts occur. Yes, you can rebuild your credit, but the bankruptcy will be on your record for 7 years. That is 7 years during your thirties that is a key time to make a successful life. It also limits your employment because it is a factor in many jobs that you have not filed bankruptcy. In short, really think about it at this period of your life before jumping into this decision.
Ravenholt & Associates
2013 Alta Dr.
Las Vegas, NV 89106
702-647-0110 office
702-647-6332 fax
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