There are numerous reasons why people turn to bankruptcy. It could be because they lived beyond their means for too long, or medical bills piled up, or a change in employment caused their debt to outweigh their income.
The psychological impact of bankruptcy can be serious. Some people think declaring bankruptcy is a failure or an admission of defeat. The stigma attached to bankruptcy may cause an individual to wait too long before filing, even if bankruptcy is the best option to help solve his or her financial problems.
The hardest part of declaring bankruptcy may be deciding when to file. That is why the most important first step to take is to consult an experienced attorney who can help you look through your options, such as whether to declare Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is generally reserved for severe cases where people have minimal extra income and are dealing with secure and unsecured debts. Chapter 13 is generally for people with heavy debt but a relatively steady stream of income that can help them pay off their debt in full over a period of years.
Bankruptcy can be a lifeline for someone underwater financially who deserves a fresh start. Talk over your options with family and friends and seek the advice of a trusted legal professional. And please understand that this a proven financial remedy, and no stigma should stand in the way of your future financial freedom.