A Payday Loan Might Help With Debt In A Post-Bankruptcy Emergency

Last Updated on Friday, 14 September 2012 12:28 Written by Ebiz Friday, 14 September 2012 12:24

Bankruptcy is a word that incites fear in the hearts and bank accounts of many Americans. Often viewed as the last step into financial mayhem, most people take precautions to avoid facing the bankruptcy judge, fearing?not only the social stigma associated with bankruptcy but also the financial ruin that can stem from it. Yet, even for the most financially cautious individuals, bankruptcy cannot always be avoided. Statistics show that two of the most common reasons for bankruptcy are medical expenses and divorce, both of which can spontaneously occur and accrue substantial costs, devastating the lives and finances of individuals and families alike. It is revealing, then, that divorce and medical expenses are also common motivations for people to secure a payday loan.

When faced with the decision of whether or not to file for bankruptcy, many questions may come to one?s mind: How is this going to affect my credit? Will I ever be able to borrow again? Can I keep my house and other assets? The answers to these questions aren?t always black and white.

While bankruptcy certainly affects your credit, damaging your FICO score for up to ten years, it can actually help individuals in dire credit circumstances to get back on their feet. Prior to filing bankruptcy, many people max out their credit cards and stop making important payments on loans, allowing their credit to slip before they even consider seeking a bankruptcy lawyer. A high debt ratio combined with late or non-payments can be nearly as damaging to one?s credit as a bankruptcy itself. In fact, a bankruptcy might help stop the cycle of debt by putting an end to certain overwhelming recurrent loan payments and credit card bills, allowing the bankrupted individual a chance to reestablish credit?but this rebuilding takes a lot of time and disciple.

It is highly unlikely that a recently bankrupted individual will be able to secure a low-interest credit card or take out a fair loan. However, other borrowing options exist. If the bankrupted person has consistent employment, he/she may be able to obtain a payday loan to cover unexpected costs. Yet, these loans do accrue substantial interest and fees when not treated responsibly. Surely, an individual who has recently gone through a bankruptcy should avoid acquiring new debt unless absolutely necessary; a payday loan should only be utilized in cases of emergencies and should be paid back immediately to avoid getting one? self into another sticky situation.

For the most part, when filing a Chapter 7 bankruptcy individuals can keep certain assets, such as furniture, their vehicle, and their home, so long as they continue paying the mortgage and/or automotive loan. While this might not be an easy feat to accomplish when financially strapped, it is often the best option, as securing living accommodations or a car loan post-bankruptcy is incredibly challenging. Before walking away from one?s home or car, an individual should consider what options lie beyond the court, reasonably assessing their needs in order to make the best decision possible. One should surrender their home to the court only after other accommodations are secured, and only if paying the mortgage is truly impossible.

While bankruptcy is often considered the final step in financial decay, it doesn?t have to be. However, anybody considering bankruptcy should consult an attorney to make sure that it is the right choice.

Source: http://blog.ebusinessdebtrelief.com/debt/a-payday-loan-might-help-with-debt-in-a-post-bankruptcy-emergency

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