Bankruptcy has become a kind of “quick fix” for debt that has gotten out of hand. Many people think it is easy to wipe the slate clean and get rid of debt by going bankrupt. It isn’t that easy, however, and it should only be used as a last resort.
The actual procedure for filing – the paperwork process itself – is relatively simple, but it goes beyond that. You’ll need to be able to justify the reason for bankruptcy, which will open your financial history for inspection by the courts. It will also be open to objections from your creditors, who obviously have an interest in stopping you from declaring bankruptcy.
There are also several long-term effects that bankruptcy can cause. Any credit cards that have balances that are wiped out by the bankruptcy will obviously be cancelled, but any other credit card accounts you have will likely be closed as well.
You will find it difficult to qualify for loans for a home, car or other large purchases. If you are approved, it will likely be at interest rates that are much higher than the norm.
Not all debts are cleared by filing bankruptcy, either. Student loans, outstanding...
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