Posted by Po-cheng Huang
First of all, I like to say that declaring bankruptcy should be the last option for any individual when dealing with their debt. There are two ways to file for bankruptcy, Chapter 7, which take away all your property and turn them into cash to pay back creditors, and Chapter 13 will work out a plan to pay back creditors without your properties taken away. After tried all possible solutions for your debt, declaring bankruptcy can take you out of debt, but you will not only have your property potentially be taken away, the fact that you have gone bankrupt will stay in you credit history for 10 years, and in court record for 20 years which will make it very hard for you to finance ever again, and even if you somehow got financed, it will get charged a much higher interest rate than an ordinary individual. Apart from the effect on your credit reports, bankruptcy will also ruin your social status, put you into your personal financial crisis, and make your life miserable. The ultimate solution to the overwhelming debt that you carry is probably to not to have any debt in the first place which means people should never spend beyond what they make, even if it means no vacation, no restaurant, no movie, no lifestyle that’s on TV because if not properly managed, you can be in a worse shape than you already are.
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