It seems like bankruptcy is one of the most convenient ways to get rid of your debt, since you will already be protected by the law. You will have some form of assistance against creditors who will be running after you, particularly your assets.
However, there are actually more disadvantages than advantages when you file for a bankruptcy. That’s why you need to make it as your last-ditch effort. Here are some of them:
1. Your credit rating will suffer terribly. One of the drastic downsides of bankruptcy is that it can hurt your credit report badly. This is because the act of filing for bankruptcy will be listed in your credit report, and it will stay there for a total of 6 years. This will then makes it very difficult for you to avail of a mortgage or a loan, unless you go for unsecured loans. But these are very risky since they have very high interest rates and limited funds that are available for you.
2. Your property will be under a trustee. When you file for bankruptcy, all your assets that you’re going to surrender will be under the name of the trustee; however, there’s a huge chance that you may have to sell your property through an auction or an outright sale, depending on the court order. As you know, there’s nothing more painful than losing those valuable properties that you’ve worked hard for all these years.
3. It’s common for those who file for bankruptcy to suffer depression. Besides losing almost all your properties and your money because of bankruptcy, a person may also lose his sense of stability and trustworthiness. This is because he would always feel that he is a complete failure and that he has not done enough to protect himself from the embarrassment that could be brought by bankruptcy.
4. It takes a long time for you to recover. You basically have to start from scratch once you’ve already filed for bankruptcy. You may have to wait for several years before you can obtain a more decent loan for yourself. You have to be living within your means, because there’s a possibility that you won’t have enough for your wants. You may even have to look for a much cheaper home and a better job, so you can start the recovery process.
Ensure that you can ask for help from a counselor to know if there are still other options that you can avail besides bankruptcy.