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Bankruptcy filing is a good option in certain circumstances

Undoubtedly, one's credit rating will be hurt by a bankruptcy filing, whether in Arkansas or anywhere else. Most people, however, are already at the bottom of the line regarding credit scores. Where a large amount of unsecured debt is discharged in a bankruptcy, there is usually a rapid re-vetting of one's credit position by the credit bureaus and others. In some cases, an improved credit rating will come within a year or two after the bankruptcy discharge, mainly because the debtor owes no unsecured debt, and are paying only perhaps on their car and house loans.

Many credit card companies feel relaxed about providing new credit to those who have wiped out tens of thousands in debt. They see these people as standing ready to reenter the ranks of the borrowing public. Because a consumer cannot file another Chapter 7 for at least eight years, lenders feel secure in dealing with these people relatively quickly.

Some financial advisers approve of a bankruptcy filing when certain facts exist. One is the hopelessly low-income situation where there is no possibility of a quick return to prior income levels. At the same time, the debtor is strapped with large amounts of debt far exceeding the debtor's capacity to repay any amount. Secondly, where the consumer has failed in getting the creditors to cooperate in reducing debt down far enough to make it affordable, bankruptcy is often recommended.

Finally, filing bankruptcy in Arkansas or elsewhere is entirely appropriate where one or more family members have lost their jobs, a medical catastrophe has arisen, or other unexpected disaster steps in to reduce one's income. Most of these situations have a certain life span that precludes quickly getting back on one's feet. The financial paralysis can be recalcitrant and pose no path back for a substantial period of digging out. In that situation, the debtor appreciates having no debt to prevent a re-building of one's life within the fastest time period possible.

Source: wisebread.com, "3 Times Bankruptcy Is the Right Move", Dan Rafter, Nov. 9, 2015

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