But Everyone Tells Me to File For Bankruptcy
There are many reasons why a person gets into overwhelming debt but all are irrelevant as the past cannot be changed. However when a person gets to the point where they cannot pay their creditors and cannot pay their living expenses, that person seeks answers. The person may start asking others for advice or even financial help yet all they hear is, “File for bankruptcy.” It is frustrating for the debtor and especially if the debtor is in this situation due something out of his or her control like a medical catastrophe or prolonged unemployment. But bankruptcy should only be a last resort. No matter how hard it is to live through this period, bankruptcy is not a first, second, or third solution. Here’s why you should do everything you can to avoid filing for bankruptcy:
People are giving you uninformed advice about bankruptcy. For many years, people were able to just walk away from debt by simply filing for bankruptcy. And because the ease of filing for bankruptcy was so notorious, many are not aware that in 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Prevention Act or otherwise known as the Bankruptcy Reform Act. So your first response to someone giving you a simple answer to file for bankruptcy is to ask them if they know of the Act. The Bankruptcy reform act tightened up the laws and rules for filing bankruptcy. It’s not that easy anymore.
If you don’t have money to live on now, where in the world are you going to get money to pay a lawyer? Some lawyers love to tell you that bankruptcy is your only answer and why wouldn’t they? They stand to gain from your decision. Even if all they get is a few hundred dollars before you run out of money, they come out with the better deal. Do they care about you or your situation? Of course they do—at least that’s what they tell you. Don’t throw money you need to live at a lawyer for filing bankruptcy. You will never get your money back.
Bankruptcy is a far worse mark on your record than having financial problems in the past or present. Potential employers are even checking credit records to see if you have a bankruptcy. It’s true that your credit report may already be in bad condition but having a bankruptcy makes it even worse than the worst. The problem is that bankruptcy has a reputation as a way for people to run up unsecured and secured debts, file for bankruptcy, and walk away from them. You may have had a very good reason for going bankrupt but the stranger looking at your credit report can’t tell that. A potential employer cannot discriminate against you solely on the basis of your credit report but when that employer is trying to pick the best candidate for a job one would have to be naïve to think the mark of bankruptcy does not affect the employer’s decision.
Bankruptcy classifies you as a quitter. Again, this classification is not fair at all however this is the way people view you and your bankruptcy. They may be very polite and give you well-meaning examples of famous people who once filed for bankruptcy but deep down inside they have you labeled as a quitter because of the reputation bankruptcy has. Whether you like it or not, many who abused the easy bankruptcy laws in past have created this stigma about bankruptcy today.