Why Would you Consider Bankruptcy

There are lots of reason why you would consider. For a moment, let us consider the meaning of that world “consider” (if you will pardon our pun). When some people speak of considering bankruptcy, they mean they are trying to decide whether or not to declare it. However, there is also another type of consideration that is vitally important relative to bankruptcy proceedings. What we mean by that is that prior to beginning such proceedings, you should consider more than just whether or not bankruptcy is the best solution for you. You should also consider which type of bankruptcy to declare and what the implications will be for you after you do so.

Loss of Employment

For the moment, we will limit our discussion to those people considering whether or not to declare bankruptcy at all. There are a number of reasons why some people might want to do this, and one of those reasons could be the loss of a job. Particularly when you have no prospects for a new one, the loss of a job can certainly leave you wondering how (or even if) you are going to be able to pay your bills. However, if you possess marketable skills, or the means to acquire the right kind of training, you may not want to pursue bankruptcy after all.

Accumulation of Expenses

Another reason some people consider declaring bankruptcy is because they have accumulated so many unexpected expenses that they can see no other way out of debt. Often, these expenses take the form of legal costs and medical bills. Still, even in the most extreme of circumstances, there is often a way to avoid the negative consequences of declaring a bankruptcy. There are various ways in which debts can be restructured, and all of those ways will have significantly less negative impact on your credit rating than a declaration of bankruptcy. A careful evaluation of your circumstances under the guidance of financial and legal professionals can probably help you identify options you may not have realized were available to you.

Fiscal Mismanagement

The most difficult set of circumstances which could lead one to consider bankruptcy are those in which money has simply been managed poorly. Though bankruptcy may be the only way out for people who find themselves in this situation, it should not be regarded as a magic pill to end all of one’s financial woes. Most bankruptcies leave at least some debts not discharged, and bad habits left unchanged can bring people back into the same situation they were in prior to declaring bankruptcy. Sometimes, those circumstances can actually grow even worse. There are even extreme circumstances in which bankruptcy may do more harm than good for a person.

In any Event

In any event, the very first thing you should do when you begin considering bankruptcy is talk to a professional. Such an individual can help you determine whether or not a bankruptcy declaration is truly your best option. They can also help you determine which type of bankruptcy would best serve your interests.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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