One of the reasons people hesitate to file for bankruptcy is out of fear. Fear that they won't be able to buy a house or car after bankruptcy. This fear is exactly what the credit card industry wants. The more people they can keep out of bankruptcy and for a longer amount of time, the better for their bottom line. Unfortunately, what is good for the credit card industry isn't often what is good for an individual who is struggling to pay bills every month. This is what is known as the fear of the "stigma" of bankruptcy.
Believe it or not I routinely get referrals from car dealerships and mortgage brokers who find it impossible to get a person financed because their credit score is too low even without bankruptcy.
The brokers and salespeople tell them to file bankruptcy first, then they can help them get a loan.
Maybe that surprises you, but I tell my clients that bankruptcy is the first step toward rebuilding credit. Once payments are delinquent, your credit rating takes a hit and getting loans for the things you need already becomes difficult if not impossible.
The first step to fixing this problem is to get out of debt. For those that don't have rich family members willing to bail them out, or assets they could sell to pay their debts, bankruptcy is many times the best option to get out of debt.
Once the person is out of debt, they can begin the process of rebuilding their credit rating. In addition, many creditors who would not have considered loaning money to you prior to the bankruptcy are willing to do so after bankruptcy because they know you no longer owe any money, so they won't have to get in line behind your "old" creditors to wait for payments.
http://www.legalhelpers.com/blog/2006_08_01_archive.html
