Why You Need To Avoid Bankruptcy

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The true cost of bankruptcy goes way beyond what you pay your attorney and court costs. If one contemplating personal bankruptcy would realize the total cost of bankruptcy, including future monetary and emotional costs, they would realize bankruptcy should be avoided if at all possible.

Unfortunately bankruptcy seems to be an easy way out and many people consider it convenient during financial difficulties. However, bankruptcy is not always the best option for most debtors because there are severe consequences that damage many aspects of someone's life after bankruptcy.

The Lasting and Distressing Effects of Bankruptcy

1. After bankruptcy your credit history now has what many consider to be the maximum damage that can be inflicted on a credit record. Bankruptcy can stay on credit bureau reports for up to ten years and will remain in court records for twenty years. This credit record will be used in judgment against you by future lenders and employers. Imagine what it will feel like to fill out an employment or loan application and hesitating every time you sign the authorization for credit check - knowing what the report will do to your chances.
   
   
2. If you file for Chapter 7 bankruptcy you will have to relinquish all of your non-exempt property. Some of this property could be your prized possessions. You might be able to keep your home depending on your state of residence. If you file for Chapter 13 you should be able to keep your property however the court ordered monthly payment may be in the form of a wage garnishment and come directly out of your paycheck.
   
   
3. If you file chapter 7 bankruptcy and every one of your bank and saving accounts gets closed, your vehicle is gone and you find it extremely difficult to start over with new accounts and car loans, you will find yourself in a fresh financial crisis and much worse off than before bankruptcy.
   
   
4. The relationship with your friends, family and co-workers may dramatically change for the worse. Your social status will decline as word of your bankruptcy gets out and people you know start to form options about your finances and your ability to handle financial matters.
   
   
5. If you make your livelihood as a small business person bankruptcy will destroy the ability of your business to grow and maybe even survive as your damaged credit report disqualifies you for working capital, expansion and inventory loans and lines of credit critical to your business. This will affect not only you but your suppliers, customers and employees as well.
   
   
6. Not only will you find it difficult to buy things on credit such as homes and cars, you will also have difficulty leasing or even renting them. You will have problems getting life, auto and home insurance and even getting security clearance if your job requires it. Your whole standard of living will be degraded.
   
   

What to Do

Before you run to court with your bankruptcy claim, thoroughly and completely evaluate and eliminate every alternative to bankruptcy available to you. There are debt management and credit counseling companies that might be able to get you out of the problems you are facing. If protection under bankruptcy law truly is your only choice, hire the best bankruptcy lawyer you can find to guide you and help you determine which type of bankruptcy filing is best for you and to protect your assets from your creditors as much as possible. At the very least know what to expect.

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