Many of you may think that filing bankruptcy is an easy way out of debt and then you can start afresh. Let me get your eyes wide open for you to see the truth. Bankruptcy is a life-changing event that results in deep damages. But of course if you have no other way out you will have to file bankruptcy. However, my advice is to avoid it like the flu.

Bankruptcy is usually not the place you would like to visit. It is a life altering event and can have long term adverse effect on your life.

Types of bankruptcy
Title 11 of U.S. Code, states that the Federal Bankruptcy Code is subdivided into 8 different Chapters. There are Chapter 1, Chapter 3, Chapter 5, Chapter 7, Chapter 9, Chapter 11, Chapter 12 and Chapter 13. Among these Chapters 7 and 13 are the more popular ones. A Chapter 7 bankruptcy stays on your credit report for 10 years while Chapter 11 stays for 7 years.

Why should you avoid bankruptcy?
Bankruptcy, like I said before is a life altering event. Let me still give you some valid reasons to avoid bankruptcy. You must carefully consider the cons before you file for bankruptcy.

  1. Bankruptcy damages your credit report. After you file for one, you usually cannot apply for consumer loans or credit cards.
  2. Your available assets (including your home and also possibly your car) will be sold off to repay creditors. Only those assets that you require to maintain a basic standard of living will remain.
  3. Your social status can be ruined from personal bankruptcy.
  4. Employment prospects also reduce if you have declared bankruptcy. Post Offices, armed forces, police force, other legal professions, accountancy firms are likely to not employ you.
  5. Your credit rating will take a long time to rebuild. Chapter 7 bankruptcy remains on your credit for 10 years and Chapter 11 remains for 7 years.
  6. Your local newspaper may publish the fact about your bankruptcy status.
  7. Your bank accounts, credit cards may be closed after you declare bankruptcy.
  8. If you have anything on lease or buying anything on loan will be immediately returned to the owner.
  9. You may have difficulty buying or even renting a home, get insured, clearing security and buying or even getting a car on lease.
  10. All of your debts will not be discharged. You will have to continue paying them off.

So if you are thinking of filing bankruptcy, you may want to think again. If you can deal with the cons of bankruptcy, you may take the risk but avoid it if you can.

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