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Most people who have a rather large amount of debt that they are failing to finish paying off, at one time or another have considered the option of going bankrupt. In this writing I am going to give you some very solid reasons why you should keep away from bankruptcy at all costs, if possible. The majority of people in debt do not comprehend the very negative impact a bankruptcy can have.

1. A bankruptcy proceeding has an enormously negative effect on your FICO credit rating and becomes a permanent public record!

A bankruptcy proceeding is one of the nastiest negative remarks that you could have put on your credit report. Thus making any additional credit you try to get extremely hard, and if you do get credit it usually comes accompanied with a extremely inflated interest rate. Plus, it will remain 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 rest of your existence. So whenever you try for new loans at any point in the future, if they ask whether you have ever filed bankruptcy legally you must answer yes.

2. Brand New Bankruptcy laws in 2005!

In 2005, our government passed a law which makes anyone filing for a Chapter 7, which wipes the plate clean of all your debts much more difficult. Basically if you have an income and a home than most assuredly you will go through a review to determine if you should go through credit counseling first for at the minimum 6 months. According to NFCC close to 80% of people in debt who try can't abide by the very regimented guidelines set from the credit counseling companies to finish the program thus tossing them back into the bankruptcy proceeding. That's when Chapter 13 comes into play which is a method of personal bankruptcy in which the court will determine how much you will pay back each collector you list based on your budget.

3. Court Controlled Income with Chapter 13!

Before the new law was put into place in 2005 many people that would have been able to claim Chapter 7, were now forced to go Chapter 13 instead. Chapter 13 requires that you review with the court and show to them all of your finances. You must show all forms of income and assets. The court will review your monthly expenses compared to your income and then determine how much money you will have to put out each month. The court decides this for you, leaving you with no say in this process. If you have liquid assets such as a house they can force you to sell them, within State law, to pay down your debt. There are timed financial reviews every year and if your financial situation changes you must tell this to the court, this could bump up the amount you pay back. If you have multiple family cars 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 money. If you have the premium cable you will be forced to cut back to standard cable, if you eat high priced steaks every night you will need to cut back to burgers. This could be a tremendously hurtful and embarrassing process.

These are all seriously bad proceedings that people should be made conscious of before dealing with a bankruptcy attorney. The majority of lawyers will play off these poor facts of claiming bankruptcy. Bankruptcy is available for a reason and for some individuals they have no other debt relief system available to them and must file bankruptcy, however many individuals go into bankruptcy when it could have been avoided. A very nice substitute option to bankruptcy is credit card debt settlement. With debt settlement in many cases you will save a lot more money than you would have through a Chapter 13, plus you will be out of debt faster as well, and not bear through the many negative consequences of a bankruptcy proceeding.