First of all, your financial reputation will be tarnished. Your credit record will carry information ascertaining to your declaring bankruptcy for around ten years. This is going to make it very, very difficult to obtain any kind of finance and in situations you find you are able to get credit, you will find yourself on the receiving end of very high interest rates. You can rebuild good credit, however.

You may also find that your family members and close friends have little sympathy. Many people, particularly those of an older generation, a generation before hire purchase and when everyone only bought what they had the cash for, struggle to understand credit, excessive finance and thus bankruptcy. You may also feel embarrassed about declaring personal bankruptcy and feel that relationships are strained with those who feel let down by this.

You should also bear in mind that declaring personal bankruptcy is a matter for public record. Everyone can find out this happened to you. Of course, it’s probably only a real issue if you live in a small town where everyone seems to know everyone else’s business thanks to issues like this being posted in the local newspaper. It’s highly unlikely that such a public announcement of your bankruptcy would take place if you live in a large city.

Finally, this may affect job applications negatively. While there is law in place that stipulates discrimination to be illegal, certain jobs do require you to pass a credit check.

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But is it more difficult to get a job after you have declared bankruptcy? Not really. Although it is becoming more and more common for potential employers to do credit checks on potential employees, your credit score would still have been quite low if you did not declare bankruptcy. Also, there are a few simple steps you can take in order to minimize the effect that your bankruptcy will have on possible employers.

First and foremost, be honest with your employer if they ask about your credit score or let you know that they will be pulling your credit records. In many cases, bankruptcies are due to a lay off, a medical emergency, a death in the family, or some other catastrophic event – if this is the case, let your interview know. If you bankruptcy was not due to an unforeseeable life event, explain that you have taken measure to reclaim your life and rebuild your credit. Especially with the recent financial crisis, employers will often understand that you have seen hard times and that hiring you would not be a risk.

James Brown
Attorney at Law
Castle Law Office
http://www.castlelaw.net

And when it comes to the pros and cons of declaring bankruptcy, the obvious place to start is with the major benefit and reason that people opt for it in the first place. The possibility of having your debts completely wiped out, being gifted a fresh financial start and the opportunity to essentially start again in financial terms. This can be such a huge relief to those who have been dogged with unmanageable bills for months and months and who have been terribly frightened for their future. However, bankruptcy will not eradicate all bills. While it will deal with credit card bills and medical bills, as well as other unsecured finance, it will not wipe out, generally speaking, student loans, criminal fines, alimony or child support.

One of the biggest downsides is the damage it does to your credit of course, what with bankruptcy featuring on your credit file for ten years. While this will make it difficult to get credit, and will ensure that you are getting much higher interest rates when you do manage to get credit, this again could also be an opportunity. With no other debts to pay off you can make regular repayments on a small and manageable credit line, thus rebuilding your credit for the longer term.

The other disadvantage is the stigma attached to such a move and its associated shame.

So there is a lot to weight up and you should make sure you consider all the pros and cons of of declaring bankruptcy before you go ahead.

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