In this day and age when it appears that most people want instant gratification, signs are indicating that filing for bankruptcy is not an exception to this. Despite the long term negative effects of bankruptcy like the fact that it will remain on your credit report like a huge red flag for the next decade, many people are looking at bankruptcy as a quick fix to give them that instant gratification to get out from under a mountain of financial obligations that seems to never dwindle down to a manageable size.
In reality, the truth of the matter is that there is nothing "instant" about the process of filing bankruptcy except for the psychological stigma that is typically attached to the process of bankruptcy, where people tend to feel like a failure for their need to raise the white flag and give up financially to start over.
With the significant recent changes in the bankruptcy law however, most people do not realize that filing bankruptcy is not a given any more. In fact, you may not even get approved to file even if you want to. In addition, there are certain types of financial obligations that are not discharged via bankruptcy, such as federally funded student loans, alimony payments, and similar court ordered judgments. In the latter category, if you delay filing bankruptcy and one of your creditors files a lawsuit against you to collect the outstanding balance, and that judgment is won, then that particular obligation cannot be wiped clean by bankruptcy because there is already an existing court order that requires you to pay it.
The psychological ill effects like low self esteem and feeling like a failure do not need to exist for filers. A lot of the people who file for bankruptcy each year do not do so because they are taking advantage of the system, nor is their filing due to any type of gross financial mismanagement. Rather, it is a reaction to a significant or live changing event that had a drastic impact on their income, such as a huge medical expense, a job layoff, a very messy divorce, or similar things that are out of the consumer's control.
One of the even more sad things about bankruptcy filings is that most consumers have not done their due diligence to seek options or find out what realistic alternatives might exist for them. For example, a personal loan may get you back on your financial feet without the long term negative effects of bankruptcy. Similarly, a debt consolidation program could also work, where the program will pay your debts at a lower monthly expenditure, which may give you the financial breathing room you need to get back in the saddle financially.
Sometimes bankruptcy is the only viable option, but you still should thoroughly investigate your options. But if bankruptcy is required, make sure you go into it with your eyes wide open. With the changes in the bankruptcy law, it is no longer a do-it-yourself process, and if you attempt to do it yourself, you could end up having more of your assets liquidated than what is actually required by law. The money you invest in a good bankruptcy lawyer can pay for itself over and over again, since they know the law and can also advise you of your possible options.
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