Debt management is a viable and much more appealing alternative to filing bankruptcy. Regardless of what you may have been told, bankruptcy is not an “easy” way out when you find yourself covered in debt. In fact, filing bankruptcy can often makes things even worse, depending on the chapter you file. Avoiding bankruptcy and opting instead for debt management is a smart move that you won’t regret. Let’s look at some little known reasons that bankruptcy is not a cure-all for your debt problems.
Bankruptcy is No Cure-All Solution
Regardless of the myths surrounding bankruptcy, none is bigger than the notion that bankruptcy is a magic cure-all that can help you to escape from debt and start living a good life without any repercussions. There are a few surprising reasons that this is just simply not true. This is a fallacy because:
- Bankruptcy doesn’t get rid of all debts, all the time. Depending on the chapter of bankruptcy that you file, your bankruptcy may not get rid of all the debts that you owe. Certain types of bankruptcy require that you make payment to your lenders, or even sell your property to pay your lenders, leaving you with nothing. What’s more, there are some debts that even bankruptcy cannot discharge, such as student loan debts or debt that you owe to the government or a government entity, like the Internal Revenue Service. Nope, they are protected legally and you can’t get them to go away quite so easily. They want their pound of “flesh”.
- Filing bankruptcy can keep you from getting the job you want. No matter if you’ve trained for years to get your degree, many employers refuse to hire anyone less than the best. That means that if you have a bankruptcy filing in your credit history, they may not trust you for the position that you have applied for, and your application may get the ax. Fair? Not always. But would you want an irresponsible person handling your cash, accounts, or affairs? Likely not.
- Bankruptcy notations can stop a landlord from renting to you. Want to live closer to your dream job? Then you’ll need good credit in most cities. Landlords, too, have a tendency to require a credit check. When they see you have filed bankruptcy, they will begin to wonder if you will pay them your rent!
- Bankruptcy demonstrates bad character, at least in the eyes of many people. The willingness that you have to walk away from your debts, abandon responsibility, and leave your creditors holding the proverbial bag often sheds bad light on you that others will use to judge you negatively, even if you have valid reasons for needing to file.