Bankruptcy is Not the Easy Way Out

If you find yourself in financial trouble how do you know what to do? There are so many choices - bankruptcy, debt settlement, debt consolidation, and even credit counseling. Before you choose the right option for you, do your research so you know what you are doing. If done right, many debt consolidation and settlement companies can help you get out of debt faster, and avoid becoming bankrupt.

Going Bankrupt

Declaring Chapter 13 bankruptcy is the last thing you want to do. The ramifications reach far beyond any discharge of the debt and stays on your credit record for years. Bankruptcy makes your life miserable and you have a strict repayment schedule, along with guidelines to meet, to satisfy the terms of the bankruptcy agreement. If there is any other option, then try to find another way to get out of debt.

Settle your Debt

If you experience serious, genuine, hardship and cannot keep up with your payments then debt settlement is an option to consider, without declaring bankrupt. Debt settlement may be the last resort before bankruptcy, but a debt settlement program can help you settle your unsecured debts in 2 to 3 years. Debt settlement companies are flexible in reworking your payment schedule if things get tough. Check out the terms and conditions a debt settlement company offers its clients, and find out their fees and charges before making a decision, but certainly consider it before bankruptcy.

Consolidate your Debt

Debt consolidation can be a satisfactory solution but understand the risks before taking advantage of this opportunity. When you consolidate unsecured debt you usually use your home as security. The advantage is the interest rate is much lower, and you avoid bankruptcy, but examine your terms to be sure you dont pay much more than you originally owed.

Think of it like this - remember that dress you bought on your credit card; or that incredible meal at the seaside restaurant? Well, if you consolidate your debt then your house becomes collateral for the things you charged to your credit card. In exchange, consolidation offers you the opportunity to get a much more attractive interest rate, and lets you avoid bankruptcy. This could work to your advantage overall, as long as you are diligent and find the most attractive consolidation options. It will also let you avoid becoming bankrupt.

Counsel your way out of Debt

Consumer Credit Counseling is similar to Bankruptcy 13 in that it shows up on your credit report for the time you are enrolled in a counseling program - 5 to 15 years. Your repayments are still high and you are obligated to make stringent monthly payments. It’s better than bankruptcy, but there is little room to default and, if you do, you may get kicked out of the program and find yourself on your own with your debts, and you may end up bankrupt. A CCC on your credit report is seen as a third party settlement when you apply for credit in the future.

Whatever option you choose, make sure you know exactly what you are doing. Read the small print on anything you sign. You need to fully understand any agency’s fees and charges, and any consequences if you default or run into further financial hardship, or you could end up bankrupt.

Debbie White is a contributing writer to www.curadebt.com and is currently writing some special articles to guide businesses on how to manage debt and avoid bankruptcy. For Bankruptcy Information and Debt Help Consultation, call toll-free 1-877-850-3328.