One of Jay Swanson's earliest money lessons was to "go ahead and go into debt," he tells CNBC Make It.

When the 39-year-old content creator and entrepreneur behind two YouTube channels and Paris in My Pocket, a digital guide to the French capital, was a teenager in Pullman, Washington, his parents helped him take out a line of credit to work on his car.

Though he had jobs from a young age and built a strong work ethic early on, "my early education in money was basically work really hard and then throw it all away," he says.

That $16,000 line of credit was just the beginning. Swanson went on to take out student loans for college and after, racked up a mountain of credit card debt through endeavors like publishing several fantasy novels and investing in a friend's tech startup. By 2017, he had around $86,500 in debt and was struggling to keep up with the payments.

Swanson moved to Paris that year and was fortunate to have a place to live rent-free. Still, his monthly debt payments totaled around $2,100 a month while he earned just $2,300 a month as a tour guide. 

"When I was here for the first summer, I was only really eating whatever I got tipped," he says. "It was a very hungry summer."

Swanson declared bankruptcy shortly after arriving in Paris. He qualified for a Chapter 7 "liquidation" bankruptcy, which allowed him to simply cease making payments on the debts, rather than get on a payment plan as would be the case with a Chapter 11 or Chapter 13 filing.

He doesn't recommend everyone take that route, but "I'm really grateful that I declared bankruptcy when I did, because it completely changed my life."

'A tool in the toolbox'

Though Swanson is glad he declared bankruptcy in retrospect, it took some time to come to terms with the decision. He initially put it off and continued trying to grind harder to pay back his debts. He grew up with the idea that "a real man pays his debts," he says.

"I worked really, really hard. And I completely thought that it was a hole that I could dig myself out of," he says. "But when you look at the math, there was no way I was ever going to dig myself out of that hole short of winning the lottery."

Swanson takes full responsibility for his financial missteps, but also wishes his family had set him up with better financial literacy so he could have avoided some of the mistakes that led him into so much debt.

While shame delayed his decision to declare bankruptcy, seeing it save his livelihood helped Swanson understand that the move is "a tool in the toolbox that a lot of people use."

"I was able to stop paying basically every penny I earned every month to credit card companies and whoever else and start putting that towards my life and my business here in France," Swanson says. (He still owes money on his student loans, which were unable to be discharged in bankruptcy.)

The ability to invest in his business helped Swanson grow the company's annual revenue each year from 2020 through 2023.

Why bankruptcy isn't right for everyone

Nearly eight years later, Swanson hardly feels a lasting impact from his bankruptcy. But that's largely because he left the U.S. for Paris.

While the bankruptcy procedure freed him from his debt obligations, his credit score took a dip. Depending on the situation and your credit history, filing for a personal bankruptcy can wipe up to 200 points off your credit score, according to Experian, and the filing stays on your credit report for 10 years.

If you live in the U.S., that can have serious ramifications, from trouble qualifying for new loans or lines of credit to difficulty being approved for a lease on a home.

"If you can pay off your debts outside bankruptcy, you should," bankruptcy attorney David Leibowitz, a past chairman of the consumer bankruptcy committee of the American Bankruptcy Institute, told CNBC in 2022. "However, if your wages are being garnished, your car has been seized and you're being hounded by collection agencies, bankruptcy may be imperative."

But because Swanson was living in France where U.S.-based credit scores are meaningless, he's been able to build up his business — including taking out new loans responsibly when needed — and live well without the overwhelming burden of his old debts.

The mark on his credit report made it more expensive and cumbersome to do a debt consolidation under his American business, but he otherwise hasn't felt the negative effects of the bankruptcy since he declared, he says. 

"Sometimes you just realize you're fighting a real uphill battle purely for pride's sake, and you don't have to," Swanson says.

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