If you are asking yourself that question the answer is probably yes. The biggest complaint I hear from people when they come to my office is “I should have done this years ago” or “My wife has been trying to get me to do this for years”. The truth is people don’t want to file a bankruptcy; for some good reasons and for some reasons that are simply unfounded. Many peoople are afraid that they will lose their home, cars, furniture etc. That is simply not true in most circumstances. Others are worried about what bankruptcy will do to their credit. Truth is, unfortunately, most people that file for bankruptcy already have poor credit already and the additional hit that a bankruptcy filing may have on their credit score is insignificant. Filing bankruptcy is actually the best thing you can do for your credit if your credit is already shot. It will stop your creditors from ever reporting your late payments, your chargeoffs, your repossessions again to the credit reporting agencies. These reportings are the things that are killing your credit. By simply eliminating any further knocks to your credit it will improve over time by doing nothing else. You can expect to see marked improvements in a relatively short amount of time.
Now, if you are in that rare class that are current on everything and have great credit but are just simply struggling to keep it all together the decision is, admittedly, tougher. You have worked hard and long for your credit and it is something you pride yourself on. Yes, your credit is going to tank by filing bankruptcy. However, you have proven that you can build and maintain great credit and you can do it again. It won’t take that long. We are talking a couple of years.
The biggest misconception that I hear regarding bankruptcy and future credit is “So will my credit be shot for 7 years or 10?” That misconception comes from the reality that a bankrutpcy may stay on your credit for up to 10 years. The misconception part is that your credit will be shot that whole time. The most important thing a creditor looks at when determining your credit worthiness is your credit score, that’s it. And the truth is your score can recover from a bankruptcy in a couple years if you will follow my credit healing plan. Even the FHA (the government agency that insures loans made by banks for home loans and only offers ultra-competitive interest rates) will approve you for a home loan in 2 years after filing bankruptcy. And, I have clients that purchase vehicles that week after receiving a discharge (albeit with a significant interest rate most likely).
In the end what you have to ask yourself is “Is this financial firestorm that is going on with me and my family going to win”? Is it going to continue to cause me and my family grief, heartache, stress and tears? Believe this – the stress that is occuring as a result of financial pressure is definitely taking a toll on your health. If you don’t recognize it now you will soon. It can be evidenced by weight gain or loss, aches and pains, depression, withdrawal, headaches among other symptoms. Only you can make the decision to put a stop to the debt spiral. Do it now or regret you waited so long later.
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