While bankruptcy is rarely going to be viewed as a wonderful moment in a person's life, it does serve an important purpose. Bankruptcy laws were designed to protect those who become overwhelmed by debts, and to ensure that people can get a fresh start on life in the event that their financial situation becomes impossible. While bankruptcy can have an adverse impact on your credit, it can also be a way for you to get a clean slate. As such, bankruptcy is not necessarily a bad thing or a good thing.
Bankruptcy allows you to either eliminate your debts (if you file a Chapter 7) or restructure them to make payments more manageable (if you file a Chapter 13). Both of these options can provide you with breathing room once your debts have become too much to handle. If you are being harassed by creditors, having your wages garnished, or are unable to support yourself and your family because your debts are too high, bankruptcy can give you a way out.
Bankruptcy is undoubtedly going to have an adverse impact on your credit. A bankruptcy filing will remain on your credit report for up to seven years, and during the period of time, you will have a hard time getting credit at a good rate. Buying a home, buying a car or buying a credit card may be more difficult as lenders will view you as higher risk. This doesn't mean that obtaining credit will be impossible. You may have to start slowly to rebuild your credit, perhaps opting for a secured card first that you pay off every month to establish a more positive payment history. You may even be able to buy a home as little as two years after bankruptcy through an FHA mortgage.
Whether or not bankruptcy is a bad thing or a good thing for you will depend heavily on your personal financial situation. Consult with a lawyer as soon as possible for advice on how to handle your debt.