To declare or not to declare - that’s the big question and is there another option? Talk to ten different people about bankruptcy and they will all give their own, personalized version of how they understand it works - without actually having been in the unfortunate situation themselves - all ten accounts will be different as bankruptcy has seemingly acquired a lot of weird and dark misconceptions - not all of them are absolutely true, but whichever way you look at it - bankruptcy can be a stressful, negative business to endure, but doesn’t bear the stigma that it did many years ago.

Bankruptcy, although a way to momentarily alleviate the immediate worry, should for an individual - be a seriously considered option and the last route to take however, if the financial situation of the debtor is so far out, then declaring bankruptcy can seem like the only option left. In some situations, it's not always up to the debtor, although in most cases it is the debtor who initiates the bankruptcy declaration to the authorities, in some cases creditors can file bankruptcy against a debtor in an overall effort at recuperating a percentage of what they are owed.

Corporations - of all sizes, file for bankruptcy for one reason or another every day, but it's not quite the same for an individual. For some debtors, the stigma and psychological effects they associate with declaring personal bankruptcy can be very overwhelming. In some unfortunate cases, individuals who haven’t been able to deal with the situation have taken drastic measures. While it is an uncomfortable, distressing situation to be in, there are many myths and misconceptions surrounding the bankruptcy process that is simply not true.

Naturally, depending on your global location the rules and regulation surrounding bankruptcy declarations and how they are processed will vary. If worrying whether 'everyone' will know about your particular predicament, that's not necessarily true although if located in one of the Scandinavian countries, the case will be published in appropriate publications in order to give possible creditors who have not been made aware of the bankruptcy case, a chance to stake their claim. It's unlikely however, that anyone other than creditors will have a subscription to a publication of this kind.

Rules and regulation concerning bankruptcy have evolved a great deal over the past few years and efforts are being made not only to discourage bankruptcy fraud, which up through the eighties was very 'in' especially with corporate bankruptcy fraud, where tax and VAT authorities were defrauded of funds owed, but also to help those individuals that really in unfortunate need of it. All kinds of people from all walks of life declare personal bankruptcy, doing this is usually due to a life-changing experience such as serious illness, unemployment, and can also be because of something quite different such as an oversight on home insurance that day there was a horrendous storm and the roof blew away and the insurance didn't cover it, due to small print regarding weather conditions, which the owners weren't aware of! Each person has their own set of circumstances and reasons why they need to consider filing for bankruptcy.

In most cases - the perception that all debt will be forgiven once a bankruptcy case has been approved - is not true, if it were then its a viable thought that those less ethical individuals would go on a never ending spending spree, not pay for the goods they'd bought and then file for bankruptcy - it just doesn't work like that and would be categorized as fraud. There are certain types of debts that cannot be erased i.e. child support, alimony, government-issued or government-guaranteed student loans, and/or debts incurred as the result of fraud. It's also very unlikely that already assessed legal settlements would be discharged i.e. settlements already legally ordered for payment to a third party who sued the individual. It is possible to file for bankruptcy regarding taxes in certain jurisdictions; this can be long and drawn out and of course there are rules and regulation that need to be looked into.

Another misconception that frequently comes up is that people think that they will lose everything they own once the bankruptcy process starts and would have to start from scratch. Depending on the severity and details of the case, which of course will vary from person-to-person and location-to-location, even an individual who is a home or car owner, would not have their home or car confiscated (subject to varying laws). Most people going through bankruptcy will be able to keep the possessions they own. The magic words here are - as long as they make their payments legally ordered by the bankruptcy court they will get to keep their belongings i.e. home and car. It's also not true to say that anyone that's been through bankruptcy will never again be able to get any kind of credit, although getting more credit after just having been through bankruptcy should be considered seriously.

Before filing for a bankruptcy case, talk to an expert first. Again depending on your location, there are volunteer entities that a debtor can call and speak to in confidence about their situation. This can be helpful in order to ask pertinent questions on finding out how to proceed, finding the right source to help with the situation. These entities would very likely be able to give answers to questions and point the individual in the right direction.