One must avoid bankruptcy while he still can. Filing bankruptcy may save one from his debts, yet this has serious demands and consequences so it shouldn’t be dealt with without due consideration.
Avoid bankruptcy and one also avoids its profuse demands. If a person is in a bankruptcy plan, he is also expected to stay current on his child support and/or alimony obligations, and to pay his taxes and a lot of his other expenses, aside from keeping with the agreed regular plan payments. This time there would be rigid restrictions on how he spends his money.
And if he is not able to complete the plan because of circumstances beyond his control like losing a job or a devastating illness, he is lucky enough if the court lets him discharge his debts on the basis of hardship; but if the bankruptcy court won’t give him a hardship discharge or even modify the plan, then the debtor would have to liquidate his movable and immovable assets.
Bankruptcy is also permitted, otherwise he could just ask the bankruptcy court to dismiss the case. He would still owe his debts, although, the payments he made during the plan would be deducted from those debts. Still, as it turns out, the creditors may now be able to add on the interest they were not able to charge while the Chapter13 case was ensuing. So should one avoid bankruptcy? – Yes.
This stringency in bankruptcy is (blamed) justifiable against Bankruptcy Fraud of those with the criminal intention of evading provision/payment for ‘debts’ although they have funds to use as payment – so-called petition mills, false oath, assets concealment, and fraudulent conveyance of property.
Even the use of multiple filings as ‘strategic’ bankruptcy (which is not a fraudulent criminal act per-se), is an all-precarious move, creating court prejudice against the filer if evidence shows that the bankruptcy is being used strategically. – Enough exasperating reasons for apt individuals to avoid bankruptcy, there are even more practical reasons to avoid bankruptcy: the filing cost, penalties, what you lose, finding an attorney, making a court appearance, not to mention the obvious stigmas and disentitlements.
Even if one succeeds in the bankruptcy plan, being able to put with the repayment plan until the end and even finding creditors granting credit at the end of the repayment period, the bankruptcy could still stay on the debtor’s credit history for 6-10 years. Having debts discharged by the court would still leave a mark on the credit report and would make it more difficult and costly to borrow money or obtain credit in the future. Is that easy to get a fresh start financially? – No.
Bankruptcy shouldn't be taken casually. Avoid bankruptcy, if at all possible, and make a smart fiscal move.
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