We live in times that are ruled by the mighty credit card. So mighty is he that millions of people have more than one. In fact, a recent survey done by one of the more leading credit reporting agencies shows that the ordinary American owns 4 cards, and that 1 out of 7 Americans own 10 or more cards.
So why should you avoid bankruptcy? After all, part of your debt is eliminated and debt collectors will stop bothering you. Well to begin with – if you file for bankruptcy under chapter 7, while some of your debt will be wiped off, the filer is obligated to sell personal assets so that you can make a payment towards the revised balance that is outstanding. Personal treasures can be sold by the Bankruptcy trustee, and the funds used to pay creditors. Belongings that are considered as crucial in the upkeep of the filer and their dependents are excused from being sold. So you may therefore lose very expensive family belongings as a result of filing for bankruptcy.
Under Chapter 13 Bankruptcy, your debt will not be eliminated. You will rather have to work out a plan of action on how you will pay off your debt generally over a two to five year period.
Bankruptcy filing does sizable damage to your credit score. In turn, this will affect your pockets by way of the amount of interest you pay. These will normally be considerably higher than that the interest rate you’d enjoy if you had a good credit score. The availability of credit will also become a problem.
Another important reason why you should avoid filing bankruptcy is because of the immense stress and shame it causes you and your loved ones. Many persons, after bankruptcy filing, had to relocate because they could not ‘keep up with the Jones’, and the shame was too much – particularly of the debt collectors come knocking on their doors, and / or they had some of their items taken back.
So to avoid all this bother, I strongly advise that you avoid filing for bankruptcy at all cost – not just by not filing, but rather by doing everything to avoid going down that road in the first place. It all starts with good management of money and exercising great discipline over your finances.
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