The timing of filing for bankruptcy is very important to consider, as well. Bankruptcy will affect your credit for many years. It will be reported by credit reporting agencies for ten years (Chapter 13 for seven years). After bankruptcy, creditors are sometimes more willing to approve credit because they know that you have eliminated most of your debt and will more than likely be able to make payments on time. More than likely, however, it is also because creditors know that you can't file for bankruptcy protection again for another eight years. So, in some ways you are now a better credit risk. This credit, however, will probably be extended at high interest rates.
Bankruptcy will give you a fresh start. But, bankruptcy will not prove beneficial if you go back into debt utilizing the same spending habits you had before the bankruptcy. Pay particular attention to the habits or special circumstances that caused the financial burden in the first place. If those habits are going to change or the special circumstances can be rectified, then filing for bankruptcy may be advantageous for you.
