Many of those people who decided to declare bankruptcy felt that they had no way out of their debt. It has become overwhelming and seemed hopeless. While there might have been other options still available these folks went with a familiar solution. In a way, it is understandable. Yet was it necessary? If you are in a bad debt situation where no matter what you try, it seems like the debt load grows heavier. You, too, may be considering bankruptcy. You need to think again because the consequences can be costly.
Most financial advisors say that bankruptcy should only be used in extreme cases and only as a last resort when very other method has been exhausted. How do people get into such a mess? A major source of debt is the credit card. It is far too easy to accumulate a tremendous card balance that leaves you paying indefinitely on interest while making no progress towards actually paying the balance off.
Probably the most common source of debt is financial mismanagement. It includes people who live far above their means and those who make bad investments. Other sources of debt, which are more commonly associated with bankruptcy, include those that the consumer had little to no control over. This could be anything from loss of job or layoff to big medical bills and legal fees.
If you are considering bankruptcy, you need to understand that it is not a simple matter of erasing the debt. The laws have been changed recently and restrictions have been established to cut down on the numbers of people who can actually declare bankruptcy. Even if you make it past the application process, there is the chance that the court will not approve you bankruptcy file and you will be out of luck as far as any debt relief is concerned.
If you still want to go through with it despite to possibility that you won’t qualify, then you should take the time to consult a bankruptcy lawyer to make the best case. They may also be able to help you find different options if the possibility of rejection is high.
What are the consequences of declaring bankruptcy? First, your credit rating will be affected for years afterwards, as long as a decade in some cases. Your credit score has more influence than it once did. Not only will be a decisive factor on whether you are eligible for a loan in the future but will determine how much you will have to pay each month if you are approved.
Rather than bankruptcy, have you considered debt consolidation? It is far less damaging to your credit than filing for bankruptcy status. You should some research about debt consolidation and bankruptcy as well. Compare the pros and cons. Ask for advice from those who went through bankruptcy. Contact a financial consultant who specialized in bankruptcy counseling and debt assistance services. Don’t settle for bankruptcy when there could be other ways to remove the burden of debt from your shoulders.