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While bankruptcy may seem to be an attractive option if you are up over your head in debts, it isn’t necessarily the way you should go if you can avoid it. By declaring bankruptcy it will very negatively affect your credit for many years to come. Also be aware that bankruptcy does not clear you against all debts. Some of these that are not cleared away are child or spousal support along with fines. Also be aware that depending on your situation debts from taxes or credit card fraud may not be discharged and student loans are often not as well. You also usually have to pay a fee to file for bankruptcy. This can range in the $300 area.

Some other options you may want to consider is to reach a deal with your creditors. By letting them know your strapped for cash they may allow for more time to pay them off. This is true especially if you let them know you will probably have to file for bankruptcy otherwise. This is only an idea for unsecured debt, not secured such as a house. You may also want to contact a Credit Counseling organization to explain your situation to. Because everyone’s situation varies, in some cases it could actually be your best option.

Is there hope for someone’s credit after bankruptcy? Yes there is but the process can be slow. Often people have claimed bankruptcy and have obtained a house 2 – 3 years later with a loan. This is especially true if you can put a decent amount down and have a good enough job to make the payments. People can also usually obtain some kind of credit card as well. The rates you make will be higher than other people but there are cards out there that will be available to you. The main thing is that if you have filed for bankruptcy and want to obtain credit in the future, is to start rebuilding your credit. I would recommend reviewing your credit report and make any necessary objections to it if needed (credit repair), live within a budget and slowly start trying to rebuild your credit.