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Don’t Avoid Bankruptcy

Many consumers continue to look for ways to avoid bankruptcy because they see it as a dark beast that will only hurt a credit score.  While it is true that a person’s credit score may fall, the benefits of a bankruptcy far outweigh the dangers.

Most people who file for bankruptcy not only get to keep most or all of their possessions, they also get a fresh start from debt or are able to restructure their debt with permission from the bankruptcy court that makes payment of past debts a much easier process.  Once a bankruptcy court becomes involved, collection attempts generally stop and the consumer is able to return to a somewhat normal way of life.  

The reason that most people look for ways to avoid bankruptcy is mostly because of social perceptions rooted in pride.  Most consumers have a problem with asking for help and see bankruptcy as a cop out.  This form of thinking will only damage a person’s potential for debt recovery.  Consumers must remember that it is often the acts of the lenders which allow debt to accumulate.  Advertisement after advertisement offer pre-approved credit cards, increased credit limits, etc.  The lenders know what they are doing when they start throwing money at consumers who have little to no chance of repaying their debts.

The best advice that a consumer can take when discussing bankruptcy is to stop trying to avoid bankruptcy and simply accept the fact that they need help.  This is especially true of consumers with families that have to be thought of as well.  A bankruptcy can save a home from foreclosure, save a car from repossession, and generally protect a family from having to live in poverty.  

Think of it this way, if bankruptcy is rock bottom, then there is only one direction to go from there:  Up.  Statistically, a person who files for bankruptcy has a greater chance of recovering from debt and improving their credit score than someone who refuses to accept the reality of their situation and continues to avoid filing.  This is because bankruptcy is a form of consumer protection assistance offered by the federal government.  Bankruptcy courts don’t hand out protection to consumers on their own, bankruptcy protection can only be requested.  The good thing about filing for bankruptcy is that even if a court refuses to provide protection (which is rare), all collection attempts against a borrower must cease as soon as it is known that the borrower has filed for bankruptcy and collection efforts may not re-initiate until the court has had a chance to review the case.  The only way for a lender to continue collection attempts before a bankruptcy court has had a chance to rule on a case is by seeking special permission from the court, which still takes a considerable amount of time.    

Not too many adults enjoy admitting that they need help with their finances, but after a certain point, few options exist.  The longer a person avoids filing for bankruptcy, the longer their debt has to accumulate.  One must also consider the implications that avoiding bankruptcy will have on their loved ones.  A person in debt should take any opportunity they can to begin the debt recovery process, and for many consumers, bankruptcy is the only real option.