Bankruptcy is Not an Easy Out of Financial Obligations

Written by jessica Alba

Today, with the lagging economy, millions of people are facing financial hardship. Foreclosures are on the rise. Unemployment is higher than it has been in at least 25 years. Parents are often working multiple jobs, and working at the businesses usually manned by high school students in the summer. Times are tough, and many individuals are at the end of their financial ropes, so to speak. But, contrary to popular belief, bankruptcy is not an easy out of financial obligations.

If you are getting ready to file for bankruptcy, or have already paid a visit to a bankruptcy lawyer, you already know that this is a step of last resort to protect your family and get a fresh start. It will not be an easy fix and you will be dealing with the repercussions for years to come.

The Stigma

A lot of people do not consider the emotional cost of bankruptcy. Even though millions of Americans are in the same boat, there is a stigma of abandoning your financial obligations and taking the easy way out. Honest, hard working adults, who have come to the end of the line, do not want to claim bankruptcy. But, they simply do not have any other options.

However, the guilt and low self-esteem they feel is very real, and it does not magically go away when debts have been forgiven. On top of that, friends and family members may not be understanding and supportive, if it comes to filing chapter 7 bankruptcy. Some people are ostracized and treated unkindly, because of the decision of last resort.

The Legalities

When the decision is made to file for bankruptcy, it is not a signature here and there, and it is a done deal. You have to hire a bankruptcy lawyer to handle all of the legalities and determine the type of bankruptcy you need to file. For example, do you qualify for chapter 7 bankruptcy? Are you going to have as many of your debts as possible expunged, or do you want to restructure and file for chapter 13?

When you are filing, you will have to go through all of your assets and liabilities. You will have to determine your net worth, and the amount you owe. Plus, if you have a job, do you have enough income to meet your obligations, or do you really need a clean slate and a fresh financial start? It will all have to be determined. You cannot just decide that you cannot handle you financial circumstances and file. It will have to be legally determined that you need to file for bankruptcy.

Future Employment

Most people do not know that bankruptcy can adversely affect future employment. If you already have a job, your boss does not have to know anything about your debt, unless he/she has cosigned for a loan. But, if you need to look for a new place of employment, your potential boss can request a credit report. If he/she feels your economic health reflects on what kind of employee you will be for a business, it is all right to check. So, if you need a new job, your application might be rejected based upon your bankruptcy.

The Basic Necessities

If anyone suggests bankruptcy is the easy way out, then they do not understand that it can be difficult to even obtain the basic necessities after bankruptcy. For example, do you have a car that is 10 years old? If so, you may want to start praying that the automobile will last another 7-10 years.

Bankruptcy can make it very difficult to purchase a vehicle. When auto dealers check your credit report, your bankruptcy will be a glaring red flag. So, if you need a different car to get to and from work, you better start saving as soon as the bankruptcy is finalized, just in case.

The same can be said for any other major purchase. For example, even if your income and lifestyle improves significantly in a year or two, it may be impossible to purchase a home, or any other major ticket item for that matter. Bankruptcy can be a major deterrent to peace of mind for the better part of a decade.

So, if you are considering bankruptcy filing, be aware that it will adversely affect your credit and spending power for years to come. Also, if anyone thinks you have taken the easy way out of your financial responsibilities, you might want to set them straight. In fact, most people are within a paycheck of financial disaster. So, your worst critics may be walking in your shoes one day. If you have to file a bankruptcy claim, you are not alone. Whether it was a series of bad financial choices, or you have become the victim of a lagging economy, you simply need to do what it best for your family, and get a fresh start.