While bankruptcy is an option worth considering for many Americans, there are certainly some drawbacks to the process. First of all, your credit will suffer for several years. As a matter of fact, your bankruptcy will most likely stay on your record for about 10 years. During that time it may be difficult to acquire loan, or you may have to pay much higher interest rates as a result of your bankruptcy.
Of course, if you’re suffering from a severe financial crisis, your credit rating is probably the last thing in your mind. Let’s say that you’re completely overwhelmed by your debts, like many people are. Ask yourself whether you can expect to pay off all your debts within a few years. If you cannot do so while making reasonable sacrifices in your monthly budget, then perhaps it is time for you to consider bankruptcy. I’m not saying you should take that option lightly, and I’m definitely not saying to forgo legal advice.
I’m simply saying that you shouldn’t be afraid to consider bankruptcy as an option to overcome your debts. You shouldn’t be ashamed if you find yourself in such bad circumstances that bankruptcy is your only way out.
This brings us to our second drawback, which has to do with bankruptcy public records. If you file any type of bankruptcy, this will become a matter of public record. If you live in a small community, this information may be posted in some kind of bulletin or community center. Again, this may not mean much to you, but you should be prepared just in case.
You may also face some resistance or scolding from friends or relatives, but you have to be prepared to make the best decision possible for you and your immediate family. You need to understand that filing for bankruptcy is a serious decision which will have a long-term on your reputation, both with financial institutions and your social circle (or whoever is able to find out). However, if your situation is severe enough for you to consider bankruptcy in the first place, then these matters probably aren’t that important to you.