Some people can survive under the pressures of missed bill payments and rude debt collectors. There are federal and state laws, including in Pennsylvania, that protect individuals from excessive harassment and unethical collection tactics. However, one type of event often motivates a consumer into taking action. It's a lawsuit filed by the creditor demanding payment, interests, penalties, and sometimes legal fees. The prospect of being sued and commanded to come into court often creates a compelling reason for a pressured debtor to file bankruptcy.htm">bankruptcy much more easily.
One journalist interviewed a seasoned bankruptcy attorney in another state. The attorney indicated that nothing shakes up someone more than receiving a lawsuit demanding large amounts of money that the individual cannot afford to pay. Other motivations for a consumer bankruptcy are divorce, losing a job, or receiving an overwhelming medical bill not covered by insurance.
Despite many public misconceptions about the impact of bankruptcy, it is actually a powerful tool for many consumers who are buried in debt and suffering from harassing collectors. One of the misconceptions that scares people is the idea that a person will never get another loan or credit extension in the future. That is far from the truth -- the biggest challenge confronted after the bankruptcy often is in deciding what kinds of accounts to obtain, how much credit to accept and how to wisely manage new credit.
There will be a lower credit score and tougher standards applied in granting new credit to one who has been discharged in bankruptcy. But steadily paying a few accounts for two or three years will work wonders in increasing your credit score here in Pennsylvania or elsewhere. The payments on all accounts, including new credit cards, must be made in full each month. Sending in minimum payments, missing some payments, or being late with payments are all signs of trouble and will put your score into a long-term state of decline.
Source: connecttristates.com, "Bankruptcy could save you from drowning in debt", Derek Frank, Sept. 18, 2014