Federal bankruptcy laws were established by the United States Congress to provide individuals and organizations with a “fresh start” by allowing them to legally eliminate all or a portion of their debts and to start anew. Federal bankruptcy laws were designed to help those in financial distress—not to further burden or hinder them.
Despite the many rumors propagated for years by creditors, debt collectors, debt counseling organizations and the like for their own self-interest, there are very few negative consequences to filing bankruptcy. To the contrary, various bankruptcy laws have been enacted to ensure that no person is discriminated against because of a bankruptcy filing.
By federal law, no person can be denied employment, a student loan or grant, or a license or permit by reason of a bankruptcy filing.
If a debtor has good credit and files bankruptcy his credit will, of course, be negatively impacted. But if his credit is already bad, filing bankruptcy can only improve his life and his ability to re-establish a good credit history. If a debtor is suffering from financial problems and is considering filing bankruptcy, he should also consider the consequences of not filing.