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What does filing for bankruptcy mean to you?

By the time an Escondido resident decides that it is time to file for bankruptcy, most of the hardest decisions have been made already. These are decisions based on weighing the pros and cons of filing for bankruptcy, such as balancing how great it will be to be out from under the dark cloud of debt versus the short-term and long-term effects on the filer's credit score. But, after the decision has been made, there are a great many more steps to be taken.

First and foremost, there are different forms of personal bankruptcy to consider. The good news, however, is that unless the filer has a steady and dependable source of income, in most cases the filer will qualify for Chapter 7 bankruptcy. Chapter 7 bankruptcy can be a true debt solution, wiping out many debt obligations completely. But, the perceived drawbacks of this form of bankruptcy can make many people nervous, as a recent article pointed out.

According to the article, one of the primary perceived drawbacks to Chapter 7 bankruptcy filings is that the details of the filer's financial situation will become known to everyone they know. However, as the article notes, that is usually not the case because bankruptcy details are not widely published - even though they are a matter of public record.

Perhaps more importantly though is how the filer believes they will be perceived by others in the wake of a bankruptcy filing. Many people believe that the social stigma of filing for bankruptcy persists, with others believing that the filer must have been grossly negligent at least or deliberately irresponsible at worst to have ended up in such a poor financial situation. However, with the economic recession of recent years having a seriously negative impact on almost every household in America, this perception about bankruptcy is probably not quite the same as it used to be.

Source: WiltonBulletin.com, "Briefly Legal: Time to declare bankruptcy?," Nicole Barber, July 8, 2014

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