What are the long term negative effects of filing for bankruptcy?

As more and more people file bankruptcy, the former stigma that once attached to the proceeding is slowly beginning to erode. Bankruptcy is no longer an automatic indication of financial irresponsibility or moral failing. Instead it is a viable alternative to suffering under mounds of debt. Still, bankruptcy should not be considered casually. There are long-term consequences to your credit.

Long-Term Effects of Bankruptcy

When you file bankruptcy, it stays on your credit report up to ten years after you receive your discharge. However, some people have been able to find legal avenues to erase the bankruptcy from their report, but it is not an easy thing to do.

Ironically, after filing a successful bankruptcy, you may find yourself receiving offers from other credit card companies. The reasoning for the new solicitation is that since you cannot file bankruptcy again for eight years, you are a better credit risk. However, these offers usually are at a higher rate of interest and the credit limits tend to be much lower. Since the purpose of bankruptcy was to eliminate debt and start over, you should be very wary of getting into more debt.

After a discharge, you have to wait at least a year before you can purchase a new car. Also, you have to wait two to three years before you can consider buying a home. You will have to convince the the lender that you are a good credit risk before they will approve a loan. In this shaky economy, loan restrictions have become tighter.

Not All Debts Can Be Discharged

Certain debts cannot be discharged in a bankruptcy. These debts include:

• Student debts
• Taxes less than three years old
• Child support and alimony

Talk with an experienced bankruptcy attorney to discuss a bankruptcy's downside.