How will bankruptcy affect me and my family?

Bankruptcy can have a trickle down affect on both you and every member of your family.  The first thing is that when you decide to file bankruptcy, you will need to let the entire family know so that they will understand the family financial situation. Children need to understand why you are telling them no to them having the latest and greatest of whatever it is that they want. When they know, they are less likely to ask for something in the first place.

Bankruptcy can break families apart. Bankruptcy can bring families closer together. I just hope that most families take the time to talk to each other so that something like this will not tear them apart. I have known people where it went both ways. When I talk to the ones that it tore apart, they just did not talk. It was like this huge elephant in the room that kept getting bigger and bigger to the point it exploded. When it exploded, there was no going back. It just tore them apart.

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On the other hand, those families that did talk it out with everyone in the immediate family, it saved them. Everyone helped out in saving whenever they could. I have seen even the kids finding creative ways to help put money in the family pot to help out.

One thing you will need to be aware of when you decide to file bankruptcy is the age of the children. If they are about to enter college, you can forget about being a co-signer for any loans to help them with their tuition. Children can still get help through federal loans on their own but their usually is a cap on the amount of the yearly loan that they can apply for. You will need to know those limits before you file bankruptcy. There is a program called a federal PLUS loan for parents that need additional help in financing their children’s education. However, if parents have filed a bankruptcy within the last five years, you will not be able to qualify for this loan help. This is why you need to discuss bankruptcy with the entire family before you actually go and file for the bankruptcy.

I am always amazed on some families that I come in contact with that have financial problems because they did take out loans for their children’s education. You cannot put a federally back student loan into a bankruptcy, so this could cause a lot of financial stress in the future. Think about “what if”. What if your child drops out of college? What if I lose my job? What if I cannot pay back the loan right away? Bankruptcy will not help these “what if” questions at all.

The key thing to remember in bankruptcy and the affects it will have on your entire family is to look at all the pros and cons way before you make a final decision. Then, when the time comes to make the final decision, make sure that everyone is in agreement and understands what needs to be done.  Bankruptcy is not for everyone.  If you need further help with your debts, click here for some more guidance with

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