Dealing With Debt and Bankruptcy

With consumer debt at an all time high, owing a debt can seem very overwhelming. A great deal of people have looked into the world wide web and have seen advertisements alleging that they can offer debt relief as a quick fix. As alluring as these ads may seem, it is important to be on the lookout for the validity of the claim.

Many claim that they can offer a quick fix, but that quick fix might be bankruptcy. And while bankruptcy is one way to attack your financial problems, in most cases it should be a last resort. The fact that when you claim bankruptcy it will stay on your credit report for ten years; this means that your chances of getting credit, jobs, a place of residence, or insurance are significantly lowered.

Consider Other Options

It’s always a good idea to consider other options before deciding to file for bankruptcy. Talk with your creditors. Many times a re-payment plan can be worked out and modified or can be paid in installments. Credit counseling services can work with you and your creditors to make debt repayment plans.

If you’re considering a second mortgage, make sure that it is within your means. These loans require your house as collateral. Bankruptcy has the capacity to stop foreclosures, debt collection activities and it may get rid of unsecured debts. Exemptions are given that permit you to keep certain assets.

However, personal bankruptcy does not usually eliminate child support, fines, taxes, alimony and in some cases student loans. Usually it will not let you hold on to your property if your creditor has a mortgage or security lien that hasn’t been paid.

Changes In Bankruptcy Laws

A relatively recent change in bankruptcy laws makes certain hurdles that you must go through before you can even file, no matter which type of bankruptcy. First, you have to get credit counseling from an organization approved by the government within six months before filling.

Bear in mind that in certain cases you need to pass a test that requires you to confirm that your income level does not exceed a certain amount.


Dealing with debt and bankruptcy is no easy feat. But the road to recovery can be made easier depending upon which path you decide to travel. Do your due diligence and explore different debt solutions to find out which one will work best for your particular situation.

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Mike Reinhardt

Although the article warns there is no quick fix and discourages bankruptcy, it fails to talk about the real issue. And until addressed the problem can still exist or reoccur, which is the behaviour that brought about the problem and the habits that have to be formed in order to see that the issue never arises again. That being, living within your means and keeping a strict budget. Be sure to put your debt payments in your budget and keep spending to only what you need. It may take you five years to balance your books, but I will save your 10 Years plus bad credit history and you will create new habits that will help you attain what you really want in the future.

Shaneen Bargamento

To those planning to file for bankruptcy: You can always look for ways to finance yourself to get by and get back on your feet. If you have just been laid off your job, you can always look for a new one. If you think that your industry is no longer a good one to work at, you can always switch to another industry that’s still in line with your skills and abilities. You can also borrow some money from close friends and family and repay them once you’ve recovered. Think of the long-term implications of your actions today. Filing bankruptcy will paint a bad light on your credit report, which will lower your chances for a new job, home, or credit.

Renata Gick

Great article to explain different options for people who are having some financial troubles. Although I agree that debt counseling is a great solution, it isn’t always viable … sometimes bankruptcy really is the only solution. Yes it does take a long time to rebuild your credit, but hopefully debt counseling will show you how to manage your money a little better in the future!

Josh Morgan

It is so easy to get into debt, but then becomes difficult to get yourself out. It really only takes one little event such as a job loss to start going under. As the article implies, It’s always good to make sure that you’re within your means when considering taking on debt. There are plenty of programs, mindsets, articles and other readings that can show you how to control your debt or even eliminate it. The radio and other programs make getting out of debt seem as easy as 1-2-3, but it could be quite costly. Bankruptcy is no joke and should not be taken lightly. I have known people who have declared bankruptcy more than once and they are not doing that well. The takeaway from this article is not to be so quick to choose bankruptcy as an option. Think before you spend.

Harry p

Very informative article. People need to understand that there are multiple options one can consider before filing for bankruptcy. Working out a re-payment plan by discussing with the creditors is the best option. Once you file for bankruptcy, the credit ratings are ruined. Not using your house as collateral is also very important unless you want to see your family with no place to live.

Nikhil jain

As the Article says, the Bankruptcy status will reflect on your credit report for 10 years, Opting for that status is not a deal I would like someone to resort to as, given its possible aftermaths,there are obvious chances that such a status quo will land you into hot water . So I would say try to evade it as much as possible and look for the other plausible debt escapes.


I agree with the statement given above that one should make sure that it is within his/her means before considering a second mortgage. This is practical since faulty planning will only lead one to the same path. No matter how many times a business owner declare bankruptcy, if he will not assess his current financial situation and live within it, he will not get to the road of success and be debt-free.

mel brown

Bankruptcy is a very scary word and the majority of people view it as the end to all means. They understand it to mean they will have to give up everything from their car to home. However the article highlighted on the fact that there are different types of bankruptcy, and that there are steps that need to be completed prior to filling. but the best part of the article was the information on debt relief/consolidation companies. Knowing that there may be a way to get credit counselling and or help, takes a huge part of the burden. However on a side not I notices a few grammatical errors that may me question the validity of the source.


Bankruptcy is a bitch. It is a bitch that most of us have to face if we don’tr manage our finances well. I think facing it and doing it was really brave. It was good because you can move on and learn from it earlier.


Agree with the re-payment method. Having good relationship with your creditor will give you advantages, at least they’re willing to help you. Remember that they need to have their non performing loan track good. So any rescheduling plan that fit your financial condition, sure they would propose it to you. Or see if there’s any other party that offer you with ease payment. You may consider to get this third party to take over your debt. See any probability for debt swap, if you have any assets out from collateral list that may help you out.
Well, preventing yourself from such bad debt is something you need to consider before taking any debt. Think twice the urgency before you take the loan.

Paul Ivan Pereira

People who are experiencing life troubles should not experience this feeling for a long time. Declaring bankruptcy is a quick escape to facing your debt, however it will prolong the feeling and experience of being in financial trouble. Not to mention dealing with the consequences of doing so. So I highly suggest to seek other alternatives and get a second or third job if needed. You might have to suffer for a year or two, but not a decade. Plus, working hard builds character so you would never want to be in that troubled position again.


Being a bankrupt has repercussions for the whole family. Extensive financial counselling is definitely required prior to making a bankruptcy filing decision, even though it may appear as the least punishing way of disassociating oneself from existing overwhelming debts.

Allan I. Varquez

Financial management entails a balance of thought between a desired loan and a capacity to pay. Yes, creditors are open to payment modification, but to avoid the risk this equation should not be taken with indifference.

Jocelyn Ponciano

As credit cards, layaways, and other loans have become more prevalent in America, so too are the individuals drowning from debt. Quickfixes are definitely alluring when one is in profound debt and become more and more desperate. Everyone should be made aware of the consequences of owing even a little. Interests after interests- they all add up. Although there are many options to fix the problem such as loan modifications, utilizing credit counseling, among others, individuals have to be more educated on the business or money jargon. How-to’s on fixing debts are good, however focusing on prevention is something as equally important if not more.

AJ Cobb

Declaring bankruptcy can be a long and drawn out experience. My personal advice to those considering it would be to follow the directions given in this article before jumping in to avoid losing homes, cars, and not having any credit or possible resources for 10 years. My father-in-law did this and his is still living in a crappy apartment, stuck in a rut!


I agree with this article that bankruptcy, though a legal privilege, ought to be considered only a last resort. I’ve also learned that although bankruptcy can stay on your credit report for up to a decade, as the author says above, a new industry of pro-bankruptcy financial services has arisen. In the past bankruptcy made it very difficult to obtain credit. Now, however, there are credit card services that target … the bankrupt. I don’t know what the terms of such credit are, but it’s noteworthy these companies exist.

Also, whereas in the past bankruptcy marked you as a high-risk financial partner, today more and more landlords and management companies, for instance, are turning a blind eye to bankruptcy. Maybe the trend to discount bankruptcy is following the significant uptick in US bankruptcy cases. I worry, however, that bankruptcy is becoming the go-to way to escape financial responsibilities–especially unsecured ones like credit card debt and, most shockingly, personal loans to family and friends who placed themselves in precarious positions to offer you help when you most needed it but when no one else would.

Jennifer Enchin

My mom just declared bankruptcy and it has been really rough for her. Avoid it if you can, it’ll ruin your credit for a long time.

Walter Casul

Bankruptcy should often be a last resort. However, it could also serve as a ‘re-assessment’ of sorts if you know how to use the funds generated properly.

Kristina Lombardi

More people need to understand the long term implications of using bankruptcy as a means to manage overall debt. Knowing that there are other options out there that can be identified by working with a credit counselling service can make a huge impact for individuals struggling with debt.

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