Why Bankruptcy Should Always Be Your Last Option


Have you ever wanted to apply for a car loan, rental apartment or even your favorite retail store’s credit card but knew you would be rejected before even filling out the loan application? Have you applied for credit online and been rejected immediately? Do you immediately shut down or break out in hives at the mention of the c word? If you have ever experienced any of these things you will have an easier time understanding why bankruptcy should always be your last option when trying to settle your finances.

Some people look at bankruptcy as an easy way out. If you are having serious difficulty with paying your bills, bankruptcy can relieve you of this responsibility rather quickly, giving you a fresh start. The downside to this is your credit scores are likely to take a major nosedive. Low credit scores show potential creditors that you haven’t kept up on your past promises to pay your lenders, making it very difficult to get any more credit.

If you have filled out credit applications in the past, you’re probably familiar with the question, ‘Have you ever filed for bankruptcy?’ The reality is that once you have begun bankruptcy proceedings, you will never be able to answer no to that question again. Your bankruptcy information stays on your credit report for up to ten years. One, two or even three years is a considerable amount of time. Five years is pushing it, but ten years is a whole decade. It’s important to take pause and really consider being under financial scrutiny for a large chunk of your life.

Another reason to try and avoid bankruptcy is because your personal information becomes public. Your name and social security number will be exposed as well as portions of your bank and credit card account numbers. Anyone can walk into the courthouse that contains your information and pull your file. Now the court systems have made it even easier to get information on you. Usually you can just pick up your phone and call into an automated system to get information on people’s bankruptcy cases. This should definitely be cause for concern, especially regarding cases of identity theft and other scams. Some people shy away from bankruptcy just for that reason alone.

Explore all your options before filing for bankruptcy. Debt consolidation is an alternative that can lower your monthly payments as well as bring down your interest rates. It is one of the most effective ways to pay down your bills while improving your credit. Though it may take a few years to complete a debt consolidation program, it’s definitely worth looking into. Another option is debt settlement, which is riskier but more affordable. Your financial situation will determine if settlement is right for you. Through debt settlement you are given an opportunity to pay off most of your debt, without all the fees and interest. Your credit scores will take a quick hit but in the right situation you can begin rebuilding your credit in no time.

Another alternative is to call your creditors and negotiate payment arrangements with them yourself. This has worked for some and sometimes creditors are willing to work with you. Even picking up a part time job to cover your expenses might be an option. If all these suggestions have been exhausted or are just not an option, then bankruptcy may very well be for you. Make sure you have at least considered all the other ways to pay off your debt before going down this life-changing path. Though bankruptcy should always be your last option, it is still an option and should be respected as such. When it is your last option it can offer hope where there is none. It is a path that will eventually allow you to breath life back into your financial future. It is there for the taking but it is an option that should never be taken lightly.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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