Filing bankruptcy indicates that you have been financially irresponsible. This is because you will not find any individual filing bankruptcy if he enjoys financial stability. Bankruptcy will affect the way in which you enjoy financial benefits. For instance, if you are buying auto insurance or you intend to take out a mortgage, you will not be able to get favorable rates if you have a damaged credit. And damaged credit is an outcome of filing bankruptcy.
Your finances may get haywire for innumerable reasons –some may be within your control and few may be due to financial emergencies you least expect. Either way, you are the loser.
How will an auto insurance carrier treat you when you file bankruptcy?
If you filebankruptcy, it stays in your credit report for a period of 7 years (Chapter 13) or 10 years (Chapter 7). During this period if you intend to buy insurance for your vehicle, the auto insurance carrier can deal with you in any one of the following ways –
• He may either offer you higher rates
• May decline your insurance request altogether.
Why are you treated likewise by the auto insurance carrier?
The auto insurance premium that you are required to pay depends on various factors. These may include –
• Driving history
• Credit
• Place of residence
• Place of work
• Age
• Marital status
• Gender
• Previous claims
• Number of miles you have driven
• Type of car
• Whether you have anti-theft devices installed etc
Credit is a very important factor. It is like reviewing one of the other factors that influence your auto insurance premium. For instance, if you have several speeding tickets to your credit or you have violated driving norms too often, it reflects that you are not a responsible driver and can cause harm to others. Similarly, filing bankruptcy indicates that you are financially not responsible. As such you are considered financially “risky” by the auto insurance carrier. This justifies why an auto insurance carrier will charge a higher premium from you or refuse to give you favorable rates if you have bankruptcy in your credit report.
