Bankruptcy

Bankruptcy should be the alternative of last resort.  It remains an option you can always pursue, after you have exhausted all other alternatives.

Filing bankruptcy does result in the forgiveness of many, but not necessarily all, types of debt.  Unfortunately, it creates a heavy burden in the process.  It can remain on your credit record for 10 years and court records for 20 years.

There is a major social stigma attached to declaring bankruptcy.  Future lenders, employers, insurers, etc. can ask you about it indefinitely.

Obtaining credit after a bankruptcy will be difficult.  Worse yet, when you do find credit, you will pay far higher interest due to a past bankruptcy.  For large purchases, such as an automobile or a home, the additional interest you pay could even be more what you owed when you filed bankruptcy.

Newly passed legislation makes it more difficult for debtors to liquidate their debts in a Chapter 7 Bankruptcy.  Debtors who don't qualify under the new law, at best, will have to pay unsecured debts over five years in a Chapter 13 Bankruptcy.