You may wake up every day with the burden of substantial debt on your shoulders. You likely keep your mind reeling trying to think of the best ways to potentially address your outstanding balances. While paying a little here and there could help slightly, your debt likely remains too much to handle on your own overall.
Though bankruptcy could be a viable option for you, you may think that following this debt relief route would have too many negative side effects on your credit. You are not alone in this assumption, but it is a common misconception. Certainly, bankruptcy will have an impact on your credit, but when it comes to obtaining loans and having higher interest payments, you may be interested to learn that the differences may not be as high as thought.
Taking out a loan
At some point or another, most people want to take out some sort of loan. Whether it is a mortgage loan, auto loan or personal loan, individuals often want to gain the best interest rates and obtain approval for the loan. You may think that if you file for bankruptcy then lenders will automatically disqualify you. Fortunately, that is not the case.
Many people who have filed for bankruptcy can still obtain loan approval. True, they may end up with a slightly higher interest rate, but what type of impact does that have overall?
Differences in payments
A study from one lending agency reviewed the different amounts that individuals who had filed for bankruptcy paid on an auto loan on average compared to those who had not filed. When it came to a $15,000 car loan, it was determined that individuals who had filed for bankruptcy typically paid an average of $2,171 more than people who did not have a bankruptcy on their records.
Of course, the timing of taking out the loan could impact interest rates and the amount paid overall. For instance, if a person applied for a loan just one year after completing bankruptcy, he or she may pay the average additional costs. However, if an individual waits two years to take out a $15,000 auto loan, he or she may only end up paying approximately $800 more.
Gaining the right information
Before discounting bankruptcy as a debt relief option due to fears of ruining credit or never again having the ability to take out a loan, you may want to make sure the information you have is correct. By gaining information from local legal resources, you could gain reliable and applicable knowledge that helps you truly determine whether bankruptcy could suit your needs.