Making the decision to file bankruptcy is a serious one to make. Time and careful consideration are required to aid in the decision since it will affect the debtor after the bankruptcy discharge. For instance, depending on the chapter of bankruptcy filed, it can stay on an individual's credit report up to ten years. Also, after filing bankruptcy the ability to live beyond one's means on credit will be greatly affected since the individual will have to slowly rebuild their credit. Any luxuries that would be bought on credit are a thing of the past, at least for a period of time post bankruptcy. Of course not all debtors have overspent their way into bankruptcy. The bad economy we have experienced over the last several years has been a leading cause for many Americans to consider filing bankruptcy as a way out of serious debt.
There have also been many people who have looked into alternative ways to avoid filing bankruptcy. One such alternative is for the debtor to negotiate with their creditor and set up a payment plan that will work for them. This takes a great deal of discipline on the part of the debtor because they will really need to strictly watch their budget. If the debtor is not able to stop spending extra money for approximately the next few years, the plan will likely fail. The angry creditors in turn can legally come after the debtor filing a lawsuit, judgment, or wage garnishment.
Another alternative is to get a second job to increase your income. Unfortunately, that is next to impossible in this bad job market. Getting a loan from family, friends, or a personal or payday loan can quickly set the debtor up for failure as well. Paying back a loan may be difficult if they are already in a situation where they are strapped for cash. Debt consolidation is another way individuals use to pay off outstanding debt by putting all of their debt into one lower payment. The problem is that there are many unscrupulous debt consolidation companies out there so the debtor must really beware. If the company does not live up to their end of the deal and pay the creditors, the debtor is still liable and can be sued by the creditors. There is no recourse since it is a largely unregulated industry and many consolidation companies just close the doors with all of the money and open up shop somewhere else under a new name.
Also if the debtor continues to charge on the old cards that got them in trouble in the first place with the consolidation loan, then they will dig themselves into a deeper financial hole. The only solution would be is filing bankruptcy and wipe out the debt which is what the individual was trying to avoid.
The bottom line is, overwhelming debt is a serious problem that many Americans are facing. If a person is at the end of their financial rope, the best thing to do is seek the advice of an experienced bankruptcy attorney. A bankruptcy attorney will advise the debtor if bankruptcy is even the right choice for them or if there is another feasible alternative so that the debtor does not waste time or money on the wrong decision. The goal in all of this is for the debtor to gain a fresh start at a stable financial future.
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