If you're having financial difficulties, you may be trying to weigh the pros and cons of requesting and filling out hardship paperwork on a loan or filing bankruptcy. So what's the difference between requesting hardship and filing bankruptcy? Money, time, paperwork and the effect on your credit report are just a few of the things you should examine before making a decision.
Cost
Requesting a hardship on your student loans or a modification usually costs you little to no money. Costs for filing bankruptcy include attorney and filing fees.
Length of Time
A hardship request can usually be filled out in a short amount of time and can be approved by the loan or credit card company quickly. A bankruptcy can take anywhere from a few months to thee years or more to complete.
Paperwork
Paperwork for a hardship request is obtained through the company who holds the loan you're seeking a hardship on and can be a few or a lot of pages. Once you complete the paperwork, the forms are returned to the company for processing. A bankruptcy petition includes many pages and must be filed through the court.
One Creditor vs. Many
A request for hardship is established through each individual creditor. A bankruptcy is filed through the court and involves all your creditors.
Effect on Your Credit Report
A hardship may show on your credit report while the hardship is occurring, but it should have no long-lasting effects on your credit report. Bankruptcy will appear on your credit report once it's filed and will stay there for seven to 10 years after filing.
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