Whether or not bankruptcy is right for you depends on your situation. Everyone’s financial picture is different.
However, many people believe that bankruptcy is going to kill their financial outlook forever. It’s important to remember that there may also be downsides to not declaring bankruptcy.
For one thing, your credit score is likely going to be wrecked by your financial situation. Not making payments because you simply don’t have the money hurts your score month after month.
Your score may already be low before filing for bankruptcy. Some financial experts note that your score can rise significantly in the 12 months after the filing. You’ve gotten rid of the debt and, though bankruptcy does initially hurt your score, you’ve also gotten rid of those constantly monthly hits.
Another downside to not filing is that those you owe may come after the money in a variety of ways. They could sell the debt to a collections company, which will then start trying to get in touch with you. They could garnish your wages so that the money is pulled out of your paychecks.
Not paying and taking no action can also lead to the loss of some of your major assets. Your car could be repossessed. The bank may foreclose on your home. With your debt and low credit score, getting either one back may be hard.
When you’re trying to decide what to do, the key is to look at the upsides and downsides to both options. Understand the legal steps you can take and what is best for your situation.
Source: NerdWallet, “When Bankruptcy Is the Best Option,” Liz Weston, accessed June 29, 2017