Is Filing for Bankruptcy ever a Good Option?
A lot of people file for bankruptcy, many of whom really don't need to. Unfortunately there are quite a few people who believe that it is an easy way to solve their debt problems. This is not the case; you are really just trading one problem for another one. Obviously there are times when it will be unavoidable but is there ever a good reason that you should consider filing for bankruptcy?
As a general rule filing for bankruptcy is not a good idea and it is something that you should do your best to avoid. That being said there will be times when the only option that you have is to file for bankruptcy. If you have debts that you can't possibly repay, particularly if you have a low income level then it may be a good idea to look into bankruptcy. While you should be trying to avoid it as far as possible there are going to be times when there is simply no way that you can.
The most likely situation where bankruptcy might make sense is if your debts are such that they are preventing you from being able to cover your regular living expenses. In many cases the interest on the amount that you owe will be more than you can afford to pay. If the interest on your debts is adding up faster than you can pay it off, that is if the interest being added each month is more than you can afford to pay you are probably going to have to declare bankruptcy since your debt problem will just keep getting worse.
Although you should be trying to avoid it the younger that you are the less damage a bankruptcy will have on your life. If you file while you are in your twenties it will be off of your credit report by the time that you into your mid thirties which is generally the time that most people will need good credit for things like buying a house. In addition when you are younger you also have fewer assets so there is less to lose by filing for bankruptcy. That being said it is not a decision that you should take lightly or rush into.
If you are going to file for bankruptcy you need to make sure that you understand what the consequences are going to be. Bankruptcy will be on your credit report for seven years and during that time you are not going to be able to borrow money, that means no credit cards, no mortgage and no car loans. In addition you will likely have a hard time renting an apartment and it may even affect your ability to get a job. This is why you want to avoid bankruptcy if it is at all possible.