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It passes through many debtors minds when swamped in debt, at one time or another have thought about the option of going through a bankruptcy proceeding. In this brief article I am going to give you a couple very serious reasons why you should steer clear from bankruptcy at all costs, if possible. A lot of people do not understand the serious negative blow a bankruptcy can have.

1. A bankruptcy hearing has an enormously negative effect on your credit rating and becomes a lifetime public record!

Bankruptcy is one of the nastiest derogatory remarks that can be logged on a credit report. Thus making any additional credit you attempt to get extremely hard, and if you do receive credit it usually comes accompanied with a extremely high interest rate. Plus, it will stay on your credit history for up to 7-10 years. Even when it gets removed from your credit history it stays a public record for the remainder of your life. So whenever you try for new loans at any point in the future, when they ask whether you have ever filed bankruptcy legally you must answer yes.

2. Brand New Bankruptcy changeover in 2005!

In 2005, Congress passed a law which forces anyone filing for a Chapter 7 bankruptcy proceeding, which will wipe the slate clean of all your debts much harder. Basically if you have an income producing job and assets than most likely you will go into a review to find out if you should go through consumer credit counseling first for at least 6 months. According to NFCC close to 80% of people who try can not abide by the strict guidelines set from them to finish the program thus throwing them back into the bankruptcy filing. That's when Chapter 13 comes into light which is a form of personal bankruptcy in which the court system will decide how much you will pay back each creditor you list based on your monetary situation.

3. The court system will control your income with a Chapter 13 Proceeding!

Prior to the new law being put into place in 2005 many debtors that would be able to claim Chapter 7, were now made to go Chapter 13 instead. Chapter 13 requires that you review with the court and make available all of your financial information. You must show all sources of income and assets. The court will look at your monthly expenses compared to your income and then come to a determination on how much money you will have to deal out each month. You do not have much of any say in this process. If you have liquid assets such as a paid off car they can force you to sell them, within State law, to pay down your debt. There are scheduled hearings each year and if your money making abilities change you must tell this to the court, this could bump up the amount you pay back. If you have two family vehicles you might have to sell one to help pay off your debts. They for lack of better words tell you what you can do with your income. If you have the higher costing cable you will need to cut back to normal cable, if you consume steaks every night you will need to cut back to cheeseburgers. This could be a very hurtful and embarrassing process.

These are all seriously unattractive things that people should be made aware of prior to speaking with a bankruptcy attorney. A lot of attorneys will not disclose these negative aspects of claiming bankruptcy. Bankruptcy is available for a reason and for some debtors they have no other option accessible to them and must file bankruptcy, however many debtors go into bankruptcy unnecessarily. A very attractive substitute option to bankruptcy is credit card debt settlement. With debt settlement in many cases you will save way more money than you could have with a Chapter 13, plus you will get out of debt faster as well, and not endure the many negative consequences of filing for bankruptcy.