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Bankruptcy cannot solve all financial challenges

Bankruptcy, while not for everybody, can be the best solution available for some people. Whether or not bankruptcy is a good idea for an individual depends on a number of factors, and it would be difficult to provide generic categories of situations in which it is the best solution. Suffice it to say it is best to work with an attorney to get all the options out on the table and determine whether bankruptcy is a good option.

Situations in which bankruptcy is not a good solution are perhaps a bit easier to identify. In these situations, bankruptcy is not helpful often because bankruptcy is not designed to address such situations. A good example is a broken lease—these may show up on one’s creditor report and hurt one’s ability to lease out an apartment again. Filing for bankruptcy can take care of the debt, but not the negative credit mark. 

Unpaid credit card debt can affect one’s ability to get another credit card. Such debt can be wiped out in bankruptcy. Such debt is not required to be paid after a certain number of years, depending on state law, making bankruptcy unnecessary after that point. Still, the mark left on one’s credit remains until it falls off the credit report.

One could list other examples of financial problems that cannot be remedied by bankruptcy. These problems often stem from the effect of such debt on one’s credit. As burdensome as it is, credit is necessary for most people at some time in their life.

Those who would benefit from bankruptcy should weigh well the alternatives. If bankruptcy provides the best solution, one should file, preferably with the help of an experienced attorney. Bankruptcy is not the best solution for everybody, though. 

Source: Fox News, “Bankruptcy Won’t Help These Money Woes,” Justin Harelik, June 26, 2013. 

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