This would affect your credit rating for seven long years (after which the credit bureaus delete the bankruptcy from your report). The upside is that it concludes repeated efforts of creditors to collect on your debt. That means seven years during which time your credit is ruined. Buying a home, or getting a credit card, or car loan becomes almost impossible. Weigh this against the impossibility of ever paying off the current total debt, plus the negative affects on your psychological health while you endure legal threats and the ongoing duress as creditors persistently keep calling your home. Debt can put a strain on relationships, and create general anxiety that weakens your whole immune system.

Turning away from paying your debts may go against your values, but consider that credit card companies for example, take a calculated business risk to lend you their money. They check your credit report (Equifax etc.) at the time of your credit request, and only then make a decision. Unfortunately, life’s circumstances change as years go by; a job may be lost, a divorce may occur, or a business deal may go sour—events that can jeopardize your ability to repay debt, despite your honourable intentions.

This brings us to the next point. To avoid a future bankruptcy, avoid surmounting debt while living within your means. Bankruptcy allows the honest debtor, who for whatever reason got in way over their head, to file for protection—with the federal government’s legislation to protect them. Accountancy firms can administer the process for you. Just check in the phone book; call and get their advice.

Debts that can be discharged include uncollateralized debt such as credit cards, and unpaid invoices for services rendered.
Debts such as unpaid child support or taxes will remain payable.

Though the bankruptcy becomes public information when you apply for a loan, only your creditors get informed by letter. Based on your income, a certain percentage of those debts will need to be repaid over time under the scrutiny of a trustee such as an accountant. And you won’t be alone as it is quite common to relieve creditor-pressure by filing. If married, sometimes only one spouse need file if they are the major owner of the debt. Though it stays on your credit report for several years; you can be released from bankruptcy debt-free much sooner.