Filing for personal bankruptcy - Is declaring bankruptcy the best option for you?

If you're thinking of filing for personal bankruptcy, I suggest you reconsider.

More than 8 years ago, I filed for a business bankruptcy, and it was one of the worst choices of my life.

You see, knowing what I know today, I never had to go bankrupt. And in most cases, you don't have to either.

All you need is a little (non legal) advice. I wish someone told me the following:

There is no debtor's prisonNo one has to worry about going to prison because of not being able to pay overdue debts.

With that said, you might be able to pay off your debts within a few years while maintaining a reasonable standard of living.

Your lawyer loves declaring bankruptcyThe only people who win in bankruptcy court are the lawyers. Before filing bankruptcy, they get paid upfront and make hundreds and hundreds of dollars per hour as most of the bankruptcy reorganization proceedings are fully computerized.

A paralegal fills out your going bankruptcy details into a computer, presses a button and the paperwork flies out of their printer in less than 15 minutes.

You're never going to get honest advice about filing a bankruptcy from a lawyer because honesty doesn't pay for the BMW lease payment.

Keep this in mind if you're still thinking about filing bankruptcy.

You can't erase tax debtWhether you're declaring bankruptcy or not, taxes are (generally) not protected by a filing. The Bankruptcy Reform Act of 1978 did not cover any tax-related debts... so you're going to owe no matter whether you get help filing bankruptcy or not.

The same is often true with student loans, child support obligations, or criminal fines -- in most cases filing chapter 7 bankruptcy does not eliminate these debts.

And secured loans like your car and house are not protected after filing for bankruptcy. So you'd still have to make payments on those items if you wish to

keep 'em.

The big black markIt's a myth that you earn a clean slate after just 7 years... it's actually 10 full years.... even more if a bankruptcy trustee slaps a "bankruptcy restriction order" on your case... it's given to you if the circumstances leading to your insolvency were activities deemed "careless" like gambling or speculation. If this happens, your name remains on the bankruptcy filing records for a period of a full 15 years.

The bottom line is filing for personal bankruptcy is a LOT more complicated than you'd think, it's VERY stressful and often unnecessary.