The financial crisis has affected all of us to some extent, and this is why many people started to think about declaring personal bankruptcy. If you have tried everything to avoid bankruptcy and none of your methods worked, then filing for personal bankruptcy is indeed the right thing to do. Nonetheless, you must do anything in your power to avoid it, since personal bankruptcy can affect you in the long run. In this article you will find 5 reasons to avoid personal bankruptcy:
Your Property May Be Affected
This is by far one of the main reasons why you should do your best to avoid personal bankruptcy. You need to know that while some assets are protected, others are not and they can be easily affected if you declare personal bankruptcy. However, this is mainly a matter of law, and laws vary from one state to another. It is essential to be well-informed regarding the laws of your state – this way, you prevent losing property and goods. Some assets (like your car, boat, trailer or even your second home) may be sold in order to cover part of your debts.
Personal Bankruptcy Will Affect Your Creditworthiness
Your credit score will be affected and this can have a negative impact in the long run, especially if you plan on getting a mortgage or other loans (secured or unsecured) in the near future. If you declare bankruptcy, this can stay on your credit report for up to a decade – and this will affect your image in the eyes of potential creditors!
Bankruptcy Does Not Necessarily Erase All Debts
It is true that in some isolated cases, declaring bankruptcy can help you get rid of your debts. Nevertheless, this is certainly not a universal rule – you will still have certain debts, like student loans or child support. If you want to file for bankruptcy simply to get rid of these debts, it is definitely not a good idea – you cannot get rid of them. The best you can do is to negotiate with your creditors and find an alternative payment plan that will allow you to pay the above-mentioned debts.
Declaring Personal Bankruptcy Is Anything But Easy!
It was very easy for people to declare bankruptcy several years ago. However, things have changed over the past 7 years and now it is a lot harder to do so. You need to know that not everybody can declare personal bankruptcy in Australia – one of the main restrictions is based on your income.
Can You Handle The Pressure?
Last but not least, think of all the pressure you will have to cope with. Declaring personal bankruptcy is anything but easy: you may feel angry, ashamed or guilty for not being able to pay back your debts. All the negative emotions that result from personal bankruptcy can have a major impact on you in the long run, so make sure you take the emotional factor into account before filing for bankruptcy.
To summarize, these are 5 of the most important reasons why you should avoid filing for personal bankruptcy. There are several steps you can take in order to avoid it, and you should play your cards right before you declare personal bankruptcy.