Is Bankruptcy The Best Way Out Of Debt
March 20, 2008
When you feel overwhelmed by excessive debt it is only natural to want to find a way to get out from under the weight. One way that many people deal with this is to file bankruptcy. As any financial advisor would tell you, bankruptcy should only be used as a last resort. In fact, it should be avoided if it is at all possible. One of the major culprits that can create debt conditions that you have no chance of recovering from is credit card debt. Those who have accumulated out of control card balances and cannot begin to pay even the minimum balances may be apt to consider filing for bankruptcy.
Other circumstances that lead many to consider bankruptcy as the answer their financial woes include those that are entirely out of that person’s control. This might include situations like loss of a job or a layoff, exorbitant medical bills, or even something like a divorce where legal fees can quickly escalate. These examples are the opposite of what is a more common source of debt, namely, financial mismanagement. In other words, you got yourself in this situation.
Those who might be considering bankruptcy as the way out of their debt crisis need to understand that it is not as easy a fix as it may have once been. This is especially true in light of recent changes to bankruptcy laws. There are more restrictions in place and more qualifications that you must meet as an applicant for bankruptcy. Even after you fill out all of the appropriate forms, your filing application must be approved by a court of law for you to actually file Chapter Seven bankruptcy and receive debt relief.
If you intend to pursue bankruptcy for debt relief you will probably have to consult a bankruptcy lawyer to help you make sense of the complicated laws that and find the best options and even some valuable alternatives.
Again, it should be emphasized that bankruptcy should only be used as a last resort because there are serious consequences involved. At the top of the list, is the impact declaring bankruptcy will have on your credit report score, which can linger for ten years after filing. With credit reports be referred to by other agencies besides creditors, it is possible that a bankruptcy may affect your chances of getting certain employment, getting loans, even how much you will have to pay for auto insurance.
What is a good alternative to declaring bankruptcy? Consumers often overlook services like debt consolidation which can be far less damaging to your credit report. It could pay to research this option and exhaust every possibility before you choose bankruptcy. Do your homework. Don’t be rash. It is certainly a means to get that fresh start that you so desperately want after enduring burdensome debt without any signs of improvement or relief, but the affects on your financial future must be considered as well.