THE DOWNSIDE OF BANKRUPTCY AND GETTING A FRESH START
Updated: Mar 30
As with everything in life, we must accept the good with the bad. Bankruptcy, like most other things has good qualities and of course it does have its bad. However, overall, for most individuals, the good far outweighs the bad.
As far as the negative aspects, much of it is associated with the perceived stigma of having gone bankrupt! Perceived stigmas or labels are just that, A PERCEIVED STIGMA. The strength of its power is only as strong as we allow. The stigma, for many people is one of the reasons why they would rather struggle with huge amounts of debt rather than be labeled a bankrupt person.
Indeed, the process of going bankrupt involves the intrusiveness of the process because it is a public event.
The individual is now the debtor as far as the process is concerned. All your once private intimate financial details are open for scrutiny by the bankruptcy system which includes the Bankruptcy Trustee, Bankruptcy Court, etc..
Your income, debt, assets, and financial activities during your most recent years are examined. Your future credit rating will change which sometimes has economic consequences. You will have to convince anyone you do business with that you did all you could before you finally resorted to bankruptcy.
Purchasing a home, car or dealing with business transactions in general will be more difficult, just because you have the bankruptcy on your credit report, which will stay there for up to 10 years. Although, you will be able to get credit relatively quickly after your discharge, it will at least cost you more initially because the bankruptcy is on your credit report. The increased interest rates will wear off in time as you get further removed from the bankruptcy event and reestablish your credit.
Now, although all the negative issues with a bankruptcy do carry some weight, there is a bright side and that makes it well worth it. Remember, the main goal of a bankruptcy is to achieve the famous FRESH START. This fresh start allows you to get out from under insurmountable debt and start over.
The ability to put huge debts behind you and have the Fresh Start is something magical for a person. Once achieved, the individual can see a brighter day and will be able to resume a normal life. The majority of individuals who have to resort to bankruptcy feel that a huge burden has been lifted off of them.
The person learns to live credit free and when they do use credit again, they have a new understanding of it and use it properly. Truly, this whole process, although difficult can be life altering and a blessing!