For people with severe financial challenges, the simple thought of eliminating their debt and stopping the harassing phone calls from aggressive creditors seems too good to be true. The fact is, however, that their debt can be eliminated through the bankruptcy process. With that said, going through the process isn’t necessarily easy, nor will it get rid of all forms of debt. To be certain, claiming bankruptcy does have its advantages, though there are many disadvantages that must be considered as well.
Many people aren’t aware that a bankruptcy claim can stay on your credit record for 10 years and that attaining credit during that time is nearly impossible. The only forms of credit that you might quality for will come at an extreme cost. You can all but forget about purchasing a vehicle or a home during the bankruptcy process, since attaining sufficient credit will be a challenge. Bankruptcy can also make it difficult for you to gain employment, since many employers will run a credit check on their prospective employees. While it’s true that your existing employee can’t discriminate against for if they learn of your situation, a new employer does have the option of peeking into your past. Of course, none of these facts are meant to scare you. On the contrary, the bottom line is that bankruptcy should be your last resort when it comes to fixing your dire financial situation. There are many alternatives to initiating a bankruptcy claim, a couple of which are listed below:
1. Credit Counseling – a system whereby you work with an agency that helps you to form a debt management plan, also known as a repayment plan.
2. Debt Consolidation Loan – similar to a debt management/repayment plan, this type of loan allows you to consolidate all of your debt under a single new loan with a lower interest rate. It’s important to be sure that your costs will be lower under this type of loan, since often times people can end up in a worse financial position than they would have been otherwise.
Claiming bankruptcy can be a valid option if you’re looking to get your finances back on track, though it’s important that you consider the available options before signing on the dotted line.
