Steve Rhode, the "Get Out of Debt Guy", wrote an article showing how avoiding bankruptcy can backfire, that people who filed bankruptcy often fared better than those who didn't.
A few points from his article:
• People who filed bankruptcy had access to more new lines of credit than those who limped along in a poor financial state.
• "I’ve seen within a year that they can start to get exceptional market rates on car financing, and within two to three years they can qualify for good mortgage rates."
• "The individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy, whereas the recovery in credit score is much lower for individuals who do not go bankrupt,” says the Federal Reserve Bank.
• Many people lose a significant amount of retirement income by not filing bankruptcy.