Declare Bankruptcy

Unfortunately, most people don’t understand the realities of declaring bankruptcy. They see it as a way to make their debts magically disappear, and feel that any consequences they may experience will certainly be more bearable than the burden of their debt.

It’s important to understand, however, that you pay a heavy price for what essentially amounts to breaking a promise. Put yourself in the creditors’ position for a moment. You make your living by lending people money and having it repaid with interest. One day, someone comes along and asks to borrow money from you, but you discover that others who have lent them money have never gotten it back. Would you lend money to this person?

The price you pay for bankruptcy is a record of the event on your credit report for ten years. That means that for ten years, you will be severely restricted when applying for credit, either by being denied or by paying exorbitantly high interest rates.

Think about how this will affect your standard of living. Getting a loan for a new house or car is virtually out of the question. Moreover, some insurance companies are now checking credit records in determining your premiums. In fact, it could adversely affect your ability to gain employment or promotions in certain fields.

Furthermore, you aren’t always relieved of all your debts. Some obligations – like federal taxes, student loans, child support, and alimony – aren’t discharged even if you declare bankruptcy.

Having a bankruptcy on your record is a stigma that stays on some states’ public record for twenty years, even though it is removed from your credit record after ten years. This does not mean that no one should ever declare bankruptcy. There are cases where people get so deeply into debt that there is just no other way to resolve the situation. However, most of the people considering bankruptcy do not fall into that category. You should most certainly seek legal advice before taking this course of action.

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