The thought of bankruptcy can sometimes feel like the easier way out of the crippling burden or debt, and in some cases it can feel like the only option available. Although it can remove the financial pressure that you are under, it is not an easy process and should only be considered as a final option.
The initial part of filing the papers is relatively easy but the entire process can be long, demanding and complicated. Not only will it require a lot of time and effort going through your financial history and justifying the reason you are filing for bankruptcy but it can be for a lot of people an very emotionally draining experience. You will be under inspection by creditors who may oppose and raise objections to some or all of your filing and they will not easily settle for less of what is owed.
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Before applying for bankruptcy you need to consider some of the longer term issues that you may face in the future:
There are some debts which are exempt from a filing for bankruptcy. Some of these debts can include back taxes from the past three years and student loans amongst others... so look into this area very carefully especially if the significant part of your debt is made up of these. Any restrictions on you financially will remain for a period of 10 years in which you will need to manage your finances extremely well to create and keep a almost perfect credit rating to earn back some financial trust. Even if you are able to obtain a low FICO score, creditors will always see bankruptcy on your credit report and be very wary. You will most likely lose immediate access to any credit cards, even those that have a credit portion on it. Getting any large credit such as home loans in the future will be extremely difficult and if you do manage it then the interest rates will be very high. Another area you need to carefully research is the possible loss of current assets, which will be dependent upon the date you purchased them. It will also depend upon where you live as States treat the matter differently although most include your residence and one car as exempt. One aspect many people don't consider is the cost of the procedure. You will probably need an attorney and the court fees will also need to be covered so this will be cost that needs to be covered with the consideration that you won't have any credit to assist you.
If this is a path you do go down and are successful at obtaining, the cycle of debt collection can be broken and you will no longer receive the constant pressure of debt collectors which can be a huge relief from the stress of many peoples daily lives. As long as you have done your research and know this is you final option, the sooner you take action, the sooner you can relieve the burden and move forward trying to create a better financial situation and credit history. If you relied heavily on credit then you will need to learn some solid money management skills as credit will not be an option for you. You may need to address your budget and ensure your income can cover your necessary expenses and if not then you will need to make some changes.
To stress again, bankruptcy should only be approached when all other options have been exhausted and thorough research into the costs, what assets you will be able to keep and what you will lose, the implications for obtaining credit in the future and also how you will be able to cover your bills and expenses once the bankruptcy is granted. Only then can you be sure that this is the right decision for you.
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