Bankruptcy might feel like a fairly simple solution, but actually it is definitely not! Going through bankruptcy has a lasting impact on many areas of your life.
Extreme amounts of debt may be something that people of all walks of life get into. The scary part, is that most people do not fit the mold that would come to mind of someone who is in financial ruin. Many of them have jobs, great wardrobes and spend huge amounts on lavish lifestyles. In fact, for many, spending is what got them into this predicament.
We have choices:
- We always have control and choices. Not all choices are necessarily the best choices but people still have to take responsibility for whatever choices they make.
- Having huge amounts of debt can feel overwhelming and scary, but every dollar owed today was spent as a conscious decision.
What are the implications of bankruptcy?
- It can be challenging to get a job in the future as your character can be called into question.
- It makes homeownership in the future quite challenging and it may be difficult to rent a place too, as some landlords require a credit check.
- Your credit score will be ruined for a number of years.
- These implications should not be taken lightly as they can be very psychologically damaging and stressful and have a severe negative impact on your life.
How can you avoid bankruptcy?
- If you’re concerned about your debt to the extent that you are considering bankruptcy, it would be a good idea to first consult an expert, whether it is a financial planner or credit counselor. They can help you to restructure and build a plan to pay off your debt.
- Your only solution is to start budgeting seriously.
It is important to note that until you determine what behavior got you into this situation, erasing the debt will do nothing for you.
- To actually go through bankruptcy, you have to qualify, meet the criteria and work with a bankruptcy trustee.
There are many good people who have made some bad financial decisions but it is possible to learn to live within their means and pay off debt. If you are struggling and need help, ask an expert and start working on an action plan.