One of the big reasons that people do not want to file for bankruptcy is that they have this idea that it is going to ruin their credit. They think they’ll never get a loan again, and they lament the loss of this financial option.

It’s true that a bankruptcy filing is a negative mark against your credit score when you file. However, from a certain point of view, you could actually say that the filing helps your credit.

Remember, you’re not filing bankruptcy for no reason. You have outstanding debt. You’re missing payments. Every time you do, your credit score falls a bit farther. All of that outstanding debt counts against you. Many lenders will not give you loans or lines of credit when they see it on your record.

Is staying in that position really a positive? You already lost the ability to get loans. You’re just doing more damage by holding onto an unsustainable financial position and dealing with debt you can never pay off.

If you file for bankruptcy, it can help you eliminate that debt. You can start making payments on time. You can get secured credit cards. You can have a fresh start. Yes, there is a drop in your score initially, when you file, but is that really worse for you than sitting on all of that unpaid debt for the indefinite future? Make sure you really consider the full financial ramifications of both options.

Those who do decide that they want to file for bankruptcy need to know exactly what steps they should take.