Filing for bankruptcy may seem like a simple solution to putting a stop to creditors' calls and tackling that mountain of debt. But in reality, it's not a get-out-of-jail-free card — and comes with a number of restrictions and consequences.
TODAY financial editor Jean Chatzky shared some key facts that everyone should consider before declaring bankruptcy:
- That black mark on your credit can remain for 10 years.
- It may prevent you from getting additional credit for several years.
- Filing for bankruptcy isn't free — there is a $300 filing fee.
- Potential landlords and employers may view the situation unfavorably.
Additionally, bankruptcy protection can’t help in every situation. Here are the bills you can’t get out of paying:
- Student loans
- Tax debts
- Child support
The bottom line? Make sure to explore all options for repaying your debts; bankruptcy protection should be your last resort.