<< Back to Consumer Tips & Articles Archive

Don't Rush Into Bankruptcy

Today's bankruptcy theme song could be "Everybody's Doing It."

Some people now have a more casual attitude about bankruptcy, just as some are more casual about getting into debt in the first place. Filing for bankruptcy can be a big mistake.

Many people who declare bankruptcy end up wishing they hadn't. They find out the hard way that:

• Bankruptcy mars your credit record. It stays on your credit report for 10 years.
• You'll have a tougher time qualifying for future credit, such as a home mortgage.
• All your financial obligations don't vanish with bankruptcy. You'll still owe for alimony, child support, and most taxes.
• Bankruptcy might even prevent you from getting a job, as employers sometimes check potential employees' credit reports.

Studies show that bankruptcies ultimately cost all of us to the tune of as much as $400 per American household per year, according to WEFA, a Pennsylvania research company. Bankruptcies touch even closer to home when they involve credit union members. Because credit unions are member-owned cooperatives, the credit union's loss affects all members.

But what if you're snowed in debt? Is there another way out? Yes. Your options:

• Start by talking to people at [credit union name]. We may be able to help you or refer you to someone who can.
• One resource the credit union may steer you to is a nearby office of the National Foundation for Credit Counseling, a not-for-profit organization. Financial counselors can set up a repayment plan to help you pay your debts. They also can act as intermediaries between you and your creditors.