Negative Effects Associated With Bankruptcy!

More people than ever before are staring down the barrel at bankruptcy. With consumer debt at an all time high, and the ruckus with the sub-prime mortgages many people are stuck with not many options to get debt relief, and most people feel bankruptcy is their only recourse. In this brief article I will list some of the negative effects of going through a bankruptcy and offer an alternative to filing for bankruptcy.

While the reasons to file for bankruptcy vary, statistically speaking, 33 percent of debtors cite job or income loss as one of the reasons or even the number one reason they filed, says John Ulzheimer, vice president of the After Bankruptcy Foundation, a nonprofit organization that helps people recover from bankruptcy. Another 37 percent cite medical and job-related reasons and 24 percent cite medical-only reasons for filing.

But the reality of bankruptcy is that it's a complicated legal procedure that will trash your credit rating.

1. Many debtor filing for bankruptcy get a feeling of being defeated and embarrassed. Your detailed financial affairs will be made available to the court and creditors.

2. You as the debtor do not have much of any say in how much you will be required to payback to the creditors, this decision is no longer yours but that of the courts.

3. You may lose valuable or treasured assets, and may even lose your business if you have one.

4. Payments may be deducted from your paycheck for up to five years.

5. Consumer debtors are required to attend credit counseling within 180 days of filing the petition for bankruptcy.

6. Debtors must also complete a personal financial management education before they can obtain a discharge.

7. A chapter 13 will remain on your credit report for seven years, and a chapter 7 for ten years.

While for some people bankruptcy will be the only option available, for many credit card debt settlement can be a much better option. Bankruptcy should be viewed as a last resort if nothing else can work. Debt settlement is by no means the magic bullet and does come with its respective pro's and con's, however for many people it is a savior from going into bankruptcy.