Bankruptcy may be the wrong choice. If you are in any of the following situations bankruptcy may be a bad option:
- You have only a few debts and strong defenses.
- The debts at issue are secured by your property such as a home mortgage or car loans and you do not have sufficient income to keep up payments and also catch up on past due amounts.
- You have valuable assets that are not exempt in the bankruptcy process.
- Because of prior bankruptcy you cannot receive a discharge in a Chapter 7.
- You can afford to pay all of your debts without hardship.
- The debts that you have are non-dischargeable, such as student loans, taxes, child support, court ordered restitution etc.
Bankruptcy is a major negative on your credit history and will stay on your credit history for 10 years. However, by the time a person is in a position to need protection from creditors they usually have a negative credit history anyway. Your ability to obtain a loan may actually improve after a bankruptcy, because a bankruptcy removes debts and improves your debt-to-income ratio. Further since a person can only file bankruptcy once every six years, many creditors see a decreased risk in making loans to people after a bankruptcy.