Bankruptcy can be painful, and you may not be the only one who is hurt by it. Before you file, you need to examine things closely so you can make the best decision possible for you and your family. In this article we will discuss some of the drawbacks of filing personal bankruptcy.
The most obvious negative consequence of declaring bankruptcy is the damage that it will do to your credit rating. Of course, this may not be the most pressing thought in your mind, because your finances may be so bad that your credit rating really doesn’t matter at the moment. Still, you have to think about the difficulties you’ll face in getting credit during the next few years. When you are given a loan, you’ll probably have to pay higher interest rates for some time.
You have to be careful about accumulating debt all over again anyway, but you should still be aware of the damage to your credit.
One consequence you may not have thought of is that innocent creditors will be hurt by your decision. We’re not just talking about huge corporations but also any small businesses that have extended you credit recently. This may be especially hard to take for the small businesses, but you should still not make a decision solely on this factor. You need to do what is best for you and your family.
Another thing that people worry about is their reputations. Certainly, bankruptcy will hurt your reputation in some circles, especially if you live in a small community where everyone knows everything about you. You may even have your name published on a bankruptcy list in some newspaper, and your bankruptcy filing will also be a matter of public record for those who are interested.
Nevertheless, this is not usually a big deal especially in larger communities. The public can attend your bankruptcy meeting, but few people are ever interested in this.