Being insolvent is one of the worst situations a person can find himself in. The threat of foreclosures, or losing one's home and valued possessions looming over one's head would cause sleepless nights. This predicament would force a person to grasp any possible solution. However, if all possible solutions fails to deliver the desired result, the last course of action is to opt for bankruptcy.

If you have tried credit counseling and you still can not pay your bills, and if you have exhausted your savings, then you should consider filing for bankruptcy.

Bankruptcy is considered as the last debt management resort because of its long lasting effect. Bankruptcy will stay in a person's record for at least 10 years. Needless to say, this would affect his future financial standing. Lenders will have to think twice before extending credit because of his being a potential credit risk. Acquiring credit cards and mortgages will be difficult if you have this on record.

Bankruptcy records are easily accessible because they are published and also can be viewed on line. This far reaching result would be detrimental to future financial dealings and employment. A person who declares bankruptcy should be prepared for the consequences ? face the rejection and ridicule of the society and associates, being branded as a failure and oftentimes judged as culpable and dishonest.

With a bankruptcy order the debtor can expect to have all his bank accounts closed. Credit cards will also be closed. On a positive note, closing of credit cards will be beneficial since credit cards could be one of the causes of the bankruptcy.

Contrary to the notion that bankruptcy would give a distressed debtor a new slate, not all debts can be discharged or written off. Examples of this are student loans, unpaid taxes and child support.

On the positive side, bankruptcy will give the debtor peace of mind, will free him from harassment of creditors and will give him a chance to have a brand new start. Stress in dealing with countless creditors will be eliminated because once the bankruptcy order is made; the appointed trustee will do the administration and the payment of the debts.

A bankruptcy stops the creditors from filing collection actions. Creditors are prevented from foreclosing, repossessing and garnishing your assets. In some states, bankrupt individuals are allowed to keep the house, the car and other possessions and a reasonable amount of cash to live by. The primary purpose of this is to lessen the risk of the bankrupt person to be bankrupt all over again.

Filing for bankruptcy could be a "habit" though. Many filers have been noted to file again. This could be attributed to the absence of proper finance and debt management. People who have experienced financial downfall would commit the same errors again and will eventually grab the last resort to get them out of the difficult financial situation...again.

Repeat bankruptcy filers are strongly advised to get proper counseling and to learn how to manage debts and finances effectively.