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Some important drawbacks of declaring bankruptcy
Bankruptcy can bring relief to those who find themselves overwhelmed with excessive credit card debt, or other kinds of debt for that matter. Nevertheless, bankruptcy does have its drawbacks, and anyone considering filing for bankruptcy should seriously consider all the consequences, both good and bad.
First of all, your credit will be severely damaged when you decide to file for personal bankruptcy. This can last for a good 10 years or so, so you want to carefully consider the consequences of your actions at this point.
Still, if you're drowning in debt and don't have any other way out, your credit score is probably the least of your troubles. You'll want to discuss your options thoroughly with a good lawyer.
You should also be aware that certain kinds of financial obligations will stay with you even if you declare bankruptcy. These may include child support and college loans. These kinds of debts are not normally eliminated in bankruptcy, so if these are the main reasons for your financial troubles you may not get much relief from filing.
There's also a possibility that you may lose some of your personal possessions. Of course, if you've reached this stage in your financial life then you probably don't own a lot of high value items.
As far as your home is concerned, you need to discuss this thoroughly with your lawyer to understand the specific bankruptcy laws and homestead exemptions in your state.
One drawback of bankruptcy which you may not have considered is the effect that it will have on your creditors. I'm not simply talking about large, impersonal corporations like credit card companies.
Small businesses who extended you credit may be left empty handed if your debts are wiped out. Yes, you have to do what you have to do for your own security and that of your family. But it's still something to think about.
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