Contrary to what most bankruptcy attorneys will tell you, filing bankruptcy is almost never the best answer. Bankruptcy leaves a serious stain on your credit report for ten years, and - under new laws passed by Congress - filing does provide the same benefits that it used to. In all but the most extreme cases, settling your debts outside of court is vastly preferable to filing bankruptcy.
If you are consumed with debt to the point that you have considered filing bankruptcy, you should contact a debt management company. Compare the options that you hear from a debt management firm to what you hear from your bankruptcy lawyer, and use the information to decide which path is best for you.
Other reasons to contact a debt management company:
- You have so many monthly bills from so many different creditors that it is difficult to keep track of payments.
- You have recently been turned down for a loan because of excess outstanding debt.
- You are unable to pay your bills on time and in full.
- You have fallen behind on your student loan debts. (Federal student loans cannot be "discharged" by bankruptcy.)
- You have resorted to using a payday loan service or pawnbroker in order to make monthly payments on outstanding debts.
- You have accounts that have been sent to collections.
- You have credit cards that have been canceled or "charged off".
Bankruptcy may be your best option if you have debts that you realistically cannot pay in your lifetime, such as medical debts in excess of several times your annual income. For most other situations, however, enrollment with a debt management company should be sufficient. The firm you choose maywork with your creditors to consolidate your bills, or may establish an individualized, workable plan for you to manage, reduce, and ultimately eliminate your debt.
Credit Card Laws: No Debt Reduction Help
Recent legislation designed to provide clear communications between credit card companies and their customers does not assist consumers with paying off debt faster. If you're slogging through a swamp of credit card debt, here are some debt reduction solutions.
Credit Counseling and Debt Settlement: Know the DifferenceIf you're struggling with too much debt, credit counseling or a debt settlement service can help. Both options help in reducing debt using different methods. Requirements and credit consequences can vary according to individual programs.
Debt Reduction Eight Steps Toward SuccessDebt help is available from credit counseling services, bankruptcy attorneys and debt settlement companies. If you're not ready to seek their assistance, try making debt reduction a family project.
How to Solve Tax Debt Created by a Spouse or Ex-SpouseDid your spouse or ex-spouse leave you with a tax debt problem, as well as a broken heart? Regarding the tax debt problem, you may have options. Here are two.
Five Personal Problems You Should Mention In an IRS AuditWhen working with the IRS to solve a tax debt problem, it's no use claiming "the dog ate my homework." However, certain personal situations do deserve mention.
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