Choosing Bankruptcy as a Debt Relief Option
For a lot of people, “bankruptcy” is a word that is thrown around when someone is experiencing severe financial troubles. But bankruptcy might not be for everyone and, like other debt relief options, is only intended for people who qualify.
Even if you are eligible, it is important to fully understand the bankruptcy process before choosing something that many say should be considered your last option.
Creditors and lenders consider bankruptcy to be a very negative mark on a person’s credit payment history. After a bankruptcy is over, it may be very difficult to obtain a loan at a low interest rate typically for 7 to 10 years. People who come out of bankruptcy are often subjected to very high interest rates or need get a secured credit card. Although debt settlements and delinquent accounts are red flags that also have a negative impact on your credit score, bankruptcy may still be the least desirable mark.
If you are seriously considering bankruptcy you should seek advice from a licensed attorney in your jurisdiction. Here are several factors you could consider:
- What types of debts are getting you in trouble? Find out whether your debts can be discharged with a bankruptcy. For example, if most of your debt is federal back taxes from less than three years ago, a bankruptcy may not help at all.
- Do you have the time and resources to file a bankruptcy? In order to file, one generally has to go through credit counseling. You may also require the assistance of an attorney, which can become costly.
- Are you willing to lose valuable assets? Depending on your income and how many assets you have, you may stand to lose property such as your home or your vehicle with a Chapter 7 liquidation.
- Can your financial records bear legal scrutiny? If you have been avoiding taxes or doing something else improper, it is likely that this information will be revealed in bankruptcy court.
- Have you discovered other ways of resolving debt? If you have not looked at other options to relieve your debt, you may be rushing unnecessarily to bankruptcy. Take a careful look at your situation—your obligations, needs and ability to pay—and consider talking to an attorney or debt resolution professional for help. Debt Shield can give you helpful information and a free consultation regarding debt settlement as a debt relief alternative.
There are benefits to filing for bankruptcy. Bankruptcy can eliminate all or most of your debt and provide the peace of mind that comes with living a debt-free life. Also, after filing for bankruptcy, creditors and collectors must cease collection attempts. As such, if your bankruptcy petition is approved, you won’t be at risk of being sued over your debts discharged by the bankruptcy. But there are downsides to bankruptcy too and it should be considered a debt relief option only when the negatives are understood. Bankruptcy can possibly be:
- Damaging: Bankruptcy may remain on your credit record for up to 10 years.
- Strict: You may be required to undergo a “means test” (an income evaluation to see if you qualify for a Chapter 7 or a Chapter 13)
- Costly: Assets such as homes and business may be taken for payment.
- Invasive: Your finances may be thoroughly examined
- Expensive: Legal fees may become burdensome.
- Lengthy: Depending on circumstances, the process may be extensive.
Debt Shield provides debt settlement as a solution that may offer less cost, credit damage, loss of privacy and embarrassment. Contact us today for your free, personalized debt assessment. If you are interesting in pursuing or learning more about bankruptcy, contact a licensed bankruptcy attorney.
Disclaimer: Debt Shield, Inc is not a law firm and under no circumstances should the information on this page or website be construed or relied upon as legal advice. If you need legal advice, you should contact an attorney licensed to practice law in your state.
