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5 Ways Bankruptcy Can Effect Your Family

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At one point or another, you might have been broke. You might take loans and be unable to pay them, which will have you in trouble with your creditors. Whereas some creditors might give you more time, some of them might come hard on you. In such scenarios, you have to think of lessening the impact this will have on you and your family. Many people run to file for bankruptcy. While this might help get the creditors off your back, it also comes with its consequences. Understanding what these repercussions might be will help you make the right call. Here are a couple of things that might happen when you file for bankruptcy.

Renting a Home

Many landlords will look at your credit score when they want to rent out their apartment to you. If you have filed for bankruptcy, chances are you might be denied tenancy. Think through your decision since no one wants to have someone with a poor credit score living in their apartment. Only file for bankruptcy if you have exhausted all your options when it comes to paying the debt.

Getting a Mortgage

Mortgages are huge loans. Your lender will need to do a thorough background check on you before they can agree to get you on board. More often, your credit score will influence your lender’s decision to give you a loan in the first place. Your application for the mortgage might get rejected, even if you have a steady salary, and you can provide a down payment. No one wants to take the risk on someone with a bad credit score. It doesn’t matter whether or not your current salary can support you paying back this loan. Since you will be using your property as collateral for a mortgage, you need to provide papers showing that it is yours. Your assets are liquidated when you apply for bankruptcy, so you cannot use your property to get another mortgage.

Securing a Loan

Unlike mortgages that use your property as collateral, you cannot do that with personal loans. Personal loans are termed unsecured. What will determine your getting such loans is your credit score. Filing for bankruptcy greatly affects your credit score. As such, many lenders will not give you a loan based on your current score. While it might not seem like you will need a loan in the future, you cannot deny the fact that you might get to a point where you need some extra money for a project or personal use. A bad credit score will ruin all chances of getting such a loan. If you get such a loan, the terms for repayment might be harder than if your score was good. Many creditors will not give you a grace period to repay such a loan. Although there can get a VA loan after bankruptcy, it will depend on the lender.

Getting a Credit Card

The notion credit cards work on is that you can pay back what you owe people in the agreed amount of time. Since filing for bankruptcy often means you did not honor this, many banks might not give you a credit card. There is the fear that you will use up the credit card amount and walk away, which is a loss to the credit card companies.

Getting a Job

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One of the devastating things that can happen to you is not getting a job because of your credit score. Even though many employers do not run a credit check on you before hiring you, some institutions do just that. If you apply for a job that requires you to handle money, your employer will need to run a background check on you and go into your financial record. It is a legal process, and they will ask for your consent before carrying out the check. One thing you need to put in mind, however, is that you might miss out on the job if you have applied for bankruptcy before.

Even though bankruptcy is a great way out of a financial issue, you need to remember that it comes with dire consequences. The one thing you can do to get a handle on this is to explore alternative options. If you can get a better way to sort out your debts, it would be a better option than filing for bankruptcy too soon.

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