Bankruptcy is almost like a 4 letter word. The sound of the word should have an emotional impact on hearing it. That’s because bankruptcy is a very serious legal issue. It is by no means a simple walk in the park, as the cheesy bankruptcy lawyers would have you believe. Therefore, in this article we shall attempt to clear the air so to speak (nothing green intended) as to what bankruptcy is, what it does and what it does not do.

The first bankruptcy laws can be traced to the 1500’s and Old England, the times of King Henry VIII in fact. In the United States, bankruptcy under went a major update in 1978. These updates and changes to the system are common referred to as the “Bankruptcy Code”. And most recently, bankruptcy laws were changed yet again in 2005.

This latest bankruptcy reform tilted the scale to the side of creditors, as opposed to debtors. The reasons Congress acted on this was the perceived abuse of the bankruptcy system. It was perceived that bankruptcy lawyers were (and even still continue to) recommending bankruptcy as a form of debt relief. People were often racking up large amounts of debt and then claiming that they were unable to pay these debts.

But people are being misled if they think that bankruptcy is a free ticket out of debt. This is simply not the case. Bankruptcy does not dismiss debt outright. Creditors can still be sued for debts which are owed. Property, including homes can still be seized. And to make matters worse - bankruptcy has very serious repercussions which occur after filing. 

One’s credit score takes an immediate hit and will actually hit a new low. Obtaining future credit will be nearly impossible, obtaining home utilities will be impossible without paying hefty deposits upfront, and one could very likely be passed over for a job, as more and more employers these days are performing credit checks as part of their routine job applicant screening process.

The bottom line is that bankruptcy is a very serious issue. If one is carrying huge amounts of debt and is looking for a way out, one should very, Very closely examine bankruptcy - but also bankruptcy alternatives such as debt settlement, debt consolidation, debt consolidation debt consolidation loans, and even consumer credit counseling.