Filing For Bankruptcy
Bankruptcy should be seen as the last resort for people who have
got themselves into too much debt. It may seem the answer to all
your prayers but bankruptcy is only able to solve certain debt
issues. Remember, if you have filed for bankruptcy you may find
it difficult to obtain credit in the future unless your
bankruptcy has been cleared, or discharged for a number of years.
Bankruptcy is very good for wiping out credit card debt. Unless
you have a special secured credit card, your credit card balance
is an unsecured debt. That means that the credit card company
has no hold on anything that belongs to you if you do not pay
back your debt. This is specifically the kind of debt that
bankruptcy is designed to remove. Apart from credit card debt,
you may have other unsecured debts, and bankruptcy can eradicate
these as well. However, bankruptcy will not discharge your
obligations to some other kinds of debts, including child
support, alimony, tax debts, student loans, and any secured
debts.
If you are reading this then the chances are that you are
considering filing for bankruptcy. Your debts have got to the
point where you cannot afford the monthly payments that your
creditors are demanding. However, there are numerous bankruptcy
alternatives. The most important thing is not to panic and to
sit down and look at your financial situation.
If you reach the stage where you are in so much debt that you
are considering bankruptcy then there are a number of measures
that you can take to avoid bankruptcy. Firstly, you should cut
up all of your credit cards. This may seem drastic, but it is
the only way to avoid bankruptcy by guaranteeing that you do not
increase your level of debt by charging more onto your credit
cards.
All lenders would prefer to receive some money rather than none
at all and when you file for bankruptcy a number of your
creditors will receive little or none of the proceeds. This is
especially the case with your unsecured loans, such as credit
cards. You should contact all of the people that you owe money
to and explain the situation. Most will work out a repayment
schedule with you as a bankruptcy alternative, giving you longer
to pay off what you owe and sometimes even freezing the
interest.