Bankruptcy is not for people who are having some inconveniences in paying their monthly bills. It is a surgical remedy that brings consumers back from the brink of the darkest financial disaster into the bright light of day. Bankruptcy is a powerful tool for those in Arkansas and elsewhere who have reached a point where virtually nothing else will work to provide meaningful debt relief.
The lending interests have succeeded in making the hit to one's credit record the main issue reported in the media when bankruptcy is discussed. It is the sword that creditors hold over their borrowers to keep them under pressure and in fear. It motivates fearful consumer borrowers to find more desperate ways to pay what they cannot afford to pay, just to buy a few precious days of peace until the incessant dunning begins all over again.
It is a bleak picture but one that does not have to occur. People living in that nightmarish cycle are not as concerned with credit ratings as they are with how to handle the crippling debt that they are carrying. In that sense, there is no more powerful or effective remedy than personal bankruptcy. It wipes out unsecured credit card debt, personal loans and medical debt, while simultaneously setting in force a comprehensive fresh start for the consumers. In effect, a Chapter 7 wipes the slate clean, without any deeper consequences than would have been there in the first place.
In other words, an Arkansas consumer with overwhelming bills who cannot dig out of the deep debt pit that exists will face credit record challenges for some years to come no matter what course of action is taken. Without the bankruptcy, the consumer's credit record will fester for years. With the bankruptcy, the consumer will start the repair process more quickly. If one finds that his or her debt load cannot be paid in full by making affordable monthly payments in the next three to five years, then the choice is bankruptcy, and the effect on the credit record will still be less burdensome than it would have been by continuing to struggle.
Source: lifehacker.com, "What Really Happens When You File for Bankruptcy", Kristin Wong, June 14, 2016