Many look to bankruptcy as a solution to the overwhelming debt problems that they are facing. While bankruptcy may be necessary in some cases, you need to be aware of all of the drawbacks associated with it.
First of all, your credit will be severely damaged when you decide to file for personal bankruptcy. This can last for a good 10 years or so, so you want to carefully consider the consequences of your actions at this point.
Still, if you're drowning in debt and don't have any other way out, your credit score is probably the least of your troubles. You'll want to discuss your options thoroughly with a good lawyer.
Another important consideration is that bankruptcy will not eliminate all kinds of debts. In most cases, your student loans, taxes, child support obligations, and criminal fines will not be discharged in bankruptcy. If these fees represent the majority of your debt, then you simply may not benefit from filing bankruptcy.
There's also a possibility that you may lose some of your personal possessions. Of course, if you've reached this stage in your financial life then you probably don't own a lot of high value items.
Still, you may have to give up certain assets which are not considered exempt for the purposes of the bankruptcy process. Depending on the value of your home and the homestead exemption in your state, your home may be in danger. This is usually not the case, but you should consider this carefully with your lawyer.
You should also consider the fact that you took on financial obligations, but the companies that lent you the money will not be getting it back. You may not shed a tear for some big corporation, but small businesses who extended credit to you may also be left without repayment.
In the end, you have to do what is best for the financial future of your family, but make sure that you consider all of your options carefully. Sometimes getting a part time job or negotiating with creditors is enough to handle your debt. If it isn't, then bankruptcy might be appropriate.
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