Four Surprising Reasons Why You May NOT Want to Avoid Bankruptcy

While no one wants to rush headlong into bankruptcy, people are more likely to make the mistake of doing anything possible to avoid it. Then, when they have exhausted all of their resources, they may end up in bankruptcy anyway. Here's why you may want to consider filing bankruptcy before you've lost everything.

1. Bankruptcy Lawyers Are Not as Expensive as You Think
   If you're considering bankruptcy, the best move you could make is to consult with a local bankruptcy lawyer. They are the best source of bankruptcy information and can make the bankruptcy process go much smoother. Unfortunately, individuals who are facing financial troubles often feel that they cannot afford to hire any type of legal help. However, most bankruptcy lawyers offer a free consultation and a structured payment plan to help out their clients.


2. Denial Can Only Put Off Bankruptcy for so Long
   Avoiding bankruptcy is never a bad idea, but denying bankruptcy as a possibility can sometimes lead you into trouble. When "honorable intent" becomes "denial," people need to draw the line and seriously consider the reality of bankruptcy. Outstanding debt, wage garnishments, and severe creditor harassments are just some of the upsetting effects of financial troubles. While other alternatives exist, bankruptcy can sometimes be the most feasible option.


3. Embarrassment Is Not a Reason to Avoid Bankruptcy
   Bankruptcy can be uncomfortable, but it's important to not let this emotion cloud your financial judgment. The truth is that most who file for bankruptcy really need help. It's the unfortunate few who try and take advantage of the system that eventually ruin the social perception of bankruptcy. It's understandable that bankruptcy can leave you feeling embarrassed, but it shouldn't be a primary reason avoiding it.


4. Your Credit History Will Suffer, But You Can Still Rebound
   One of the serious concerns when considering bankruptcy is the effect is has on your credit history. Depending on the chapter of bankruptcy you file, the bankruptcy will be reported for seven to ten years. Although the stain of bankruptcy will stay on your record, you can rebuild your credit history during that time. In addition, consider that most individuals already have a troubled credit history by the time bankruptcy becomes a possibility. Without the help of bankruptcy, these outstanding debts are likely to remain and damage one's credit history even further.

Are You Avoiding Bankruptcy or Simply Delaying It?

Debt counseling, debt management, and various financial planning are all possible methods to help you avoid the dreaded route of bankruptcy. But you have to seriously ask yourself if you are actually avoiding bankruptcy, or simply delaying it. While the alternatives to bankruptcy are much more favorable, some individuals are just buried too deep in debt for any other help. If you've been delaying bankruptcy, remember that bankruptcy is a powerful tool which can protect you from creditors and discharge your eligible debts. While bankruptcy doesn't exactly give you a clean slate, it can alleviate some of your troubles to get you back on your feet financially.

Source:
U.S. Courts - Bankruptcy Basics

About the Author:
Heindrick So works for a Bay Area Real Estate company that specializes in residential wholesale lending. His work experience is comprised mostly of sales and marketing background which included a high end media sales position at Magnolia Hi-fi. Heindrick is also in his final year of pursuing his Bachelor's Degree in Electrical Engineering at San Jose State University.