As a last resort, bankruptcy is sometimes the only answer to starting fresh and rebuilding credit and finances. Declaring bankruptcy has serious long term financial implications and therefore should not be undertaken lightly. When an individual files for bankruptcy, the court takes control over all assets and orders them to be liquidated and used to repay creditors. For 10 years, the declaration of bankruptcy will appear on credit reports, which will likely make insurance and payments more expensive. When considering bankruptcy, first look to see if it is possible to pay off debts within the next two years. If the answer is no, then filing for bankruptcy might be considered.
Family breakup is one of the top three reasons that families with children cite as the cause of bankruptcy.17 Experts advise families to wait until the crisis that resulted in financial disaster passes before filing for bankruptcy, so the risk of increased debts after filing is minimized. If there is nowhere else to turn, bankruptcy offers the opportunity to have a fresh start, but at a cost that is better avoided if possible.