Bankruptcy might be something you are considering if you owe a lot of money to credit card companies. At this point, I urge you to reconsider. Because? Read on to find out why bankruptcy should be your last (and I mean it) last resort.
- It’s not always easy: It seems we’ve been led to believe that filing for bankruptcy is the easiest way to look at debt relief. It can be, but it’s rarely as easy as it seems. There are paperwork to file, you may need to hire a lawyer, you will mind having to fight when someone determines that some of your debts cannot be forgiven, etc. You can’t wake up one morning and go to bed the same night cleared of all your debts. In fact, not everything will be included. Taxes, alimony, and child support are automatically excluded from bankruptcy.
- Negative Impact on Credit Score: The most important reason why you should not file bankruptcy and use it as a debt relief procedure is your credit score. Do you value your credit score? Do you want to rent an apartment, buy a new house or try to get a new job? If so, these factors must be taken into consideration. Most of the time, those who go the bankruptcy route get a much lower credit score for seven years. Think of all the people who check your credit report and score; the aforementioned homeowner, financial lenders, and even new employers.
- He did not pay his debts: This may seem like a given because it is one of the reasons so many consumers opt for bankruptcy; they can practically walk away from their debts. Sounds good at the time, but think about that credit score again, and then build from there. Anyone who checks your credit report will see that you didn’t really seek debt relief; you ran away and hid. This does not send a good message. Basically, it shows that you have no problem racking up a bunch of bills and not paying them.
As you can clearly see, using bankruptcy as a way to look at debt relief is not as good an idea as we have always been led to believe. So don’t make the biggest mistake of your life. At least consider your other options (such as liquidation and consolidation) before making any major financial decisions.