Bankruptcy vs debt consolidation, which one is right for your current debt problems?

Personal bankruptcy is not the only alternative to getting out from under mountains of debt. Consider it a last resort. It will follow you for seven years on your credit report and forever as a federal court document. Court documents are open to the public.

Many job applications ask if you’ve ever declared bankruptcy, even if it’s been discharged and years ago you still have to answer yes.

However, many people have found great advantages in doing so. If you are struggling financially, this option just might be what you are looking for.

There are two major advantages of filing for personal bankruptcy. They are eliminating calls from creditors, at all hours of the day and protecting your property.

Once you have officially filed for bankruptcy your creditors can no longer contact you in regard to your unpaid debts, nor can they legally attach your wages. They must, instead, abide by federal bankruptcy law and attempt to obtain reimbursement.

Property protection is important. In the majority of personal bankruptcy cases debtors are allowed to retain property such as their residence and automobile. Unfortunately, many individuals forego filing for bankruptcy because they are under the mistaken impression that they will lose everything.

This action will sometimes give you the advantage over the creditors who continuously contact you for payment, as well. Since they are responsible for obtaining their own legal representation when attending the meeting of creditors, many times they will write off the debt in lieu of paying for an attorney.

Filing for personal bankruptcy immediately puts a stop to events such as utility shutoffs, evictions, repossessions and many types of lawsuits. A word of warning if you’re involved in a lawsuit that may result in you paying financial damages, wait until after the lawsuit to file. For individuals who have been constantly struggling to stay afloat, this is a relief beyond compare.

Before taking that final step look at other methods of reducing your debt. Call your creditors and see if they’ll accept a lesser amount to pay off a debt in full. Cut back on expenses that aren’t necessary. Perhaps you could give up your afternoon gourmet coffee drink or pack your lunch instead of going out to lunch. Sell assets and use the proceeds to pay down debt. Even consider a part time job.

If you find yourself in financial crisis, consider the possibility of personal bankruptcy but keep in mind it is a last resort.

About the Author:

Do you need a loan, credit card, or grant? Want to know about other ways to find money? Find out more at 58 Ways to Find Money or go to Credit Cards and You. Dee Power has co-authored several nonfiction books including Business Plan Basics, Inside Secrets to Venture Capital and Attracting Capital From Angels.

Christina Costa | Bankruptcy Basics |

Tags: avoid bankruptcy, bankruptcy alternatives, Debt Management

A Free Gift For You!

As a way of saying "Thank You" for visiting this site here's a free gift for you. This money saving eBook is worth $17.

About this eBook: Are you wasting money? Chances are there are ways that you can easily cut back on your unnecessary spending and you won't even notice a difference. Simply learning about these techniques is the first step to making changes to your finances. We asked money experts what their best tips are for trimming the fat from the average person's budget and here are their suggestions. Click here to download this free eBook. This is a time limited offer and the download link can be taken away without notice. No sign-up form to fill-up, no email address to give, just plain free download!

You might also like to read these recommended articles

• Take Control Of Your Finances
  More than ever before, Americans are drowning in debt. Studies show that the average American family uses up to 8 credit cards, and carries between $7,500 and $10,000 in credit card debt alone--add student loans, mortgages, equity lines and car payments to the mix, and it can be a recipe for disaster. Experts warn that as interest rates climb, and the market becomes increasingly uncertain, it is more important than ever to be in control of our finances.
  
  
• Debt Consolidation Loan Fundamentals
  This article describes the first steps that a person looking for a debt consolidation loan should take to protect themselves from further financial problems. Debt consolidation isn't a magic fix-all for getting out from under a pile of loans and credit card debt. As a matter of fact, used by itself, a debt consolidation loan can end up getting you into much more trouble than you were in before you entered into the program. Companies that offer this service do it to make money. It's that simple. That's one of the key facts you should keep in mind when negotiating on the terms of your consolidation loan. They're not doing you a favor, they're making money off you.
  
  
• Some Of The Things You Need To Consider When Looking For Debt Solutions
  Most people who borrow money do so fully intending to repay the loan according to the agreed upon terms. Perhaps, at the time they borrowed the money, things in their lives were going well financially and having the resources to repay the debt was not a concern. Unfortunately, things can happen in a person's life that can severely change their ability to satisfy their debts, such as a death in the family or losing their job. For these people, not only do they have to deal with whatever tragedy has befallen them, they also have to deal with angry creditors who have no sympathy for their plight.
  
  
• Credit Cards And Debt Consolidation
  It's easy not realize how much you've spent on vacation. It's difficult to hold back your credit card spending during the holidays and birthdays. If you've bought a house you probably have a hefty mortgage payment. And of course your car payment is a big chunk of your budget. Perhaps you've faced a few unexpected emergencies or had major medical or dental treatment.