Is Bankruptcy The Answer

When people have dug themselves deep into a financial hole, many times they cannot see any way they will ever get out of it, and start thinking about bankruptcy. But is bankruptcy really your best option, or simply the first one that comes to mind? 

For most people, it is simply the first answer that comes to mind. Most people do not work in the financial field and therefore have almost no idea what options or alternatives they may have. They may have had friends who filed for bankruptcy, where they were told them you go see a bankruptcy lawyer, explain your situation, fill out some forms, pay the fees, and then it's a done deal.

While the aspect of having your overwhelming and staggering pile of debt turn into a "done deal" is extremely attractive, the reality is that it is rarely as simple as that, especially in light of the recently changed bankruptcy laws. For example, did you know that in bankruptcy:

* You may not even be able to file. No longer is this done on a whim. The courts will examine your financial situation and your income, and needs to approve your bankruptcy before you can file. There is no guarantee that you will be granted this approval.

* There are multiple ways or chapters you can use, depending on your financial situation and a variety of other factors. With certain chapters, the term "bankruptcy" is actually incorrect since your debts are not wiped out, but simply restructured.

* There are certain kinds of debt that bankruptcy will not eliminate or wipe out. If a good portion of your indebtedness consists of these kinds of debts, bankruptcy is not going to help you very much at all.
Truth be told, the consumer considering bankruptcy needs to be very familiar with the bankruptcy laws, and particularly how those laws have recently changed, compared to the "common knowledge" that your neighbor or co-worker tells you is fact.

A surprising percentage of consumers who file have not thoroughly investigated their options and alternatives. No, a personal loan is probably not a good idea since that only serves to prolong what might be inevitable anyway and may even be digging your hole a bit deeper, but have you considered Debt Consolidation?

One very strong point to be said for debt consolidation services is that your credit report does not have this huge red flag on it for the next 7 to 10 years alerting potential lenders that you have filed bankruptcy, and they also rarely have restrictions on the type of debt that can be rolled into such a program.

In summary, you need to familiarize yourself very thoroughly with the law and how it applies to your particular situation.

Consider discussing it with a bankruptcy lawyer, who can advise you as to your options and what to expect, since every situation is different, and they are familiar with what the probably outcome would be. People have reported that they saved more money than they spent with a qualified attorney based on things they didn't know about the law.