Filing for bankruptcy can be considered an instant way to become debt free. If you file under Chapter 7 of the US Bankruptcy Code, you are able to get rid of your credit card debt completely within 4 months. It seems great.

However, it is not ideal to do so because there are many negative impacts which you may not know. The effects can be seen not only on your credit report, they can seen everywhere in your life. Seriously speaking, I am not exaggerating. I am sharing the truth with you.

Having bankruptcy on your credit report will bring negative impact to your life. This statement will be filed on your credit report for 10 years. This duration is not short and there is no short cut to remove this negative item. Psychologically and emotionally you may feel bad being a bankruptcy.

Besides that, there are many possible consequences which you don’t expect. Let take a look on the effects:

• In many cases, for people who have declared bankruptcy, it is indeed difficult for them to obtain home loan, auto loan or personal loan in the future. The lenders are not willing to consider their applications.
• Even if there are lenders who are specialized in providing financial assistance to bankruptcies in the market, they usually charge very high interest rates to this group of borrowers. It is not worthwhile to obtain loan with high interest because it is an additional financial burden for you in life. Same thing will happen if you start receiving new credit cards or you start paying car insurance premium. The interest charged by the card providers and the premium charged by the insurance providers are higher than the normal borrowers. You may think this is unfair but you have to accept the cruel fact.
• In today’s business world, there are “conservative” companies which normally reject applicants who have filed bankruptcy. You can’t blame anyone if you are denied a job.

After taking a look at the possible consequences, do you think it is still worthwhile for you to declare bankruptcy in order to get your finances back to control? I would say AVOIDING BANKRUPTCY is a MUST when you need to clear all your credit card debts. There are other alternatives which you can apply.

Why don’t you consider settling your debt at a reduced amount or obtaining debt consolidation loan to overcome your debt issue?

There is no difference among these two financial solutions with filing bankruptcy because if you file the bankruptcy under Chapter 13, you still need to pay back your debt through a repayment plan fixed by the court. In addition, your credit score will not be badly damaged if compared with declaring bankruptcy.

To sum up, when you have accumulated a big sum of outstanding balances on your credit card statements, you are reminded not to consider filing bankruptcy as your financial option. It will never be a good choice.