Craig Johnson If you look around, you can see plenty of examples of powerful and “wealthy” people and corporations using bankruptcy as a financial strategy and shield from creditors. In some cases, companies and individuals have been forgiven millions and even billions of dollars in debt by declaring Chapter 7 or Chapter 11 bankruptcy.

If you’ve found yourself deep in debt, the idea of making those financial obligations seemingly vanish might be tempting — but in reality, bankruptcy should only be considered a last resort. “Often I find that people file for bankruptcy when they’ve had one too many calls from the debt collector,” Clark says.

“But that’s not the reason to file.” Clark says a key factor in deciding whether to file for bankruptcy protection is determining your ability to handle the debt vs. the pressures associated with it. “The reason you file bankruptcy is because you’re at a point where you’re never going to be able to work your way out of the debts you have,” he says.

“And that’ll happen sometimes, but most of the times, you’ll be in a position where you’ll be able to handle the debt as long as you come up with a plan.” Bankruptcy has some advantages. Namely, it stops creditors from nagging you constantly about what you owe them.

But there are some real disadvantages as well. In many cases, you may be forced to sell some sentimental assets, like your home. Read more from…

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