Most debtors who have a hefty amount of debt that they are having problems looking to pay off, at one time or another have considered the option of filing for bankruptcy. In this writing I am going to give you three very serious reasons why you should evade a bankruptcy proceeding at all costs, if you can. Many people in debt don\'t realize the very negative blow a bankruptcy can have.

1. Filing for bankruptcy has an very negative impact on your credit rating and becomes a permanent public record!

Bankruptcy is one of the worst derogatory 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 receive credit it usually comes accompanied with a pretty elevated interest rate. Plus, it will remain on your credit report for between 7-10 years. Even when it gets removed from your credit report it stays a public record for the duration of your existence. So when you apply for new credit at any point in the future, if asked the question whether you have ever filed bankruptcy legally you must answer yes.

2. Brand New Bankruptcy changeover in 2005!

In 2005, our government passed a law which forces anyone filing for a Chapter 7 bankruptcy proceeding, which wipes the table clear of all your debts much more difficult. Basically if you have an money and assets than most likely you will go through a review to determine if you should go through consumer credit counseling first for at the minimum 6 months. According to NFCC close to 80% of people in debt who apply can\'t abide by the very regimented guidelines set from them to finish the program thus throwing them back into the bankruptcy filing. That\'s when Chapter 13 comes into play which is a form of personal bankruptcy in which the court system will decide how much you will pay back each creditor you list based on your monetary situation.

3. Court Regulated Income with Chapter 13!

Prior to the new law being passed in 2005 many debtors that would have been able to file for Chapter 7, were now forced to go Chapter 13 instead. Chapter 13 requires that you go over with the court and disclose all of your finances. You must show all forms of income and assets. The court will look at your expenses compared to your income and then come to a determination on how much money you will have to dish 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 paid off car they can make you sell them off, within State law, to pay down your debt. There are timed financial reviews every year and if your income increases 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 higher costing cable you will be forced to cut back to basic cable, if you consume high priced steaks every night you will need to cut back to burgers. This could be a very hurtful and embarrassing process.

These are all extremely bad things that debtors must be made conscious of prior to meeting with a bankruptcy attorney. Many lawyers will play off these unattractive aspects of bankruptcy. Bankruptcy is there for a purpose and for some people they have no other method accessible to them and must file for a bankruptcy proceeding, however a lot people go into bankruptcy unnecessarily. A great substitute option to bankruptcy is debt settlement.