Filing for bankruptcy can trash your financial life in so many ways. Even if you are successful in the courts, your old debts still can resurface as “unpaid” on credit reports.
A better strategy is to pay off debt over time, using bankruptcy only as a last resort. In July 2011, about 1,217 businesses and individuals sought Chapter 11 protection, a 24.2 percent increase over June, according to data from Automated Access To Court Electronic Records (AACER).
“There’s no quality to debt. Years ago it was tax deductible, but it hasn’t been for decades,” says John F. Harrison, CFP with Aspire Financial Advisors in Newtown, Mass. “The interest added to items purchased on credit doubles, and even triples, their cost and creates emotional stress.”
Whatever the size of your debt load, there almost always is a way out without claiming bankruptcy.