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.