Bankruptcy is a legal declaration of your inability to pay your debts. Bankruptcy laws provide you with protection that can save some of your assets, keep your creditors at bay, and provide you with the help of a professional to sort out the situation. It is an option, but is it the best option?

Facts About Bankruptcy

To some people, bankruptcy seems less damaging these days. They see big corporations declaring bankruptcy and decide that it must be okay. But the consequences of personal bankruptcy are serious and long lasting.

Bankruptcy should be viewed as a last resort, not as a natural outcome of a credit crisis. Usually there are far less drastic solutions available. Here are some facts to keep in mind if you are considering declaring bankruptcy:

• Bankruptcy will remain on your credit report for seven years.
• It may affect your ability to rent or buy a home.
• It may impact your ability to obtain future credit, including credit cards.
• You will not be excused from certain debts, including tax debt, certain court-imposed fines, and alimony/spousal and child support.
• Your pension or profit-sharing plan may be affected.
• It may affect your living standard by denying you the privilege of using credit to purchase necessary items such as large appliances, plane and car reservations, etc. 
• It may affect your career if a future employer questions your attitude toward responsibility.

While declaring bankruptcy may provide a fresh start, the negatives may outweigh the positives. You should, therefore, evaluate every alternative to meeting your obligations before considering bankruptcy.