While it can feel awful for you, it is important to remember that bankruptcy is a legitimate option for you if you are burdened with debt and unable to make repayments. Plenty of people file for bankruptcy – successful business people file for bankruptcy, often as a tactic, and sometimes out of necessity. Donald Trump, for example has filed for bankruptcy twice... and still built his business up again and again. Robert Kiyosaki has built his business up while living in a car. It's all possible, you just need to know how bankruptcy works, and know what your options are. Filing for bankruptcy may be a positive step for your finances, you are taking control of your future.

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Why file for bankruptcy

IF you find yourself in a position where the repayments for your existing debts are becoming impossible to meet without affecting your families basic needs like food and shelter, then you need to consider your options, and fast. It would be preferable not to have reached this point before taking some action, but it's understandable, many people try to hold off and believe that they can pull themselves out of the situation they are in. Filing for bankruptcy can assist you in that your need to repay your debts will be alleviated and your family can breathe easier.

The effects of filing for bankruptcy

There are some effects of filing for bankruptcy which are inconvenient, but again – it's not the end of the world. These will be different depending on where you live and the legal jurisdiction that applies in your country. The main issue is your bankruptcy must be declared when asked. For example when you apply for credit, they may ask if you have ever been declared bankrupt. It is an offence not to answer truthfully, but it's ok – really – do you think Donald Trump has never again been able to get credit after filing twice for bankruptcy?

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The fact that you have filed for bankruptcy will be recorded on your credit file for a period of time, again the detail will depend on the rules that apply in your jurisdiction. For example, in Australia, your credit file goes back seven years. If you have a default on a loan recorded on your file eight years ago, the details will not come up when a credit check is done.

More information about filing for bankruptcy

Filing for bankruptcy is not ideal, but it may well be a positive step for your personal finances. I would urge you to speak first with a credit or financial counsellor in your area if you are considering filing for bankruptcy. They can give you more information of the details in your jurisdiction and information on how to initiate the process. If may be that financial relief options other than filing for bankruptcy are more suitable to your personal circumstances – in which case you can get advice about that.

The key point about filing for bankruptcy is that once you do it, it is not the end of the world. You don't have to lose your home and car – and often you quality of life remains the same or even improves. Filing for bankruptcy does not prohibit you from earning an income – you still have to feed your family, but there are some minor restrictions on your activities. Seek local advice – knowledge is power.