Is It Wise To Declare Bankruptcy To Get Out Of Debt?
Many people who are stuck in excessive debts with different creditors do not know what to do to resolve their problem. When this happens, the first solution that comes to mind is often filing for bankruptcy. But should you declare bankruptcy right away if you can’t keep up with debt repayment? Is it possible to recover from bad debt without resorting to bankruptcy?
Get Out of Debt Without Filing for Bankruptcy
Since the amendment of the Bankruptcy Law, the process has become more complicated that it was a few years ago. Back then, it was not required for an individual to go through credit counselling before submitting a bankruptcy application.
Today, it is the first step towards applying for bankruptcy. Unless you complete a credit counselling course with a government accredited credit counselling agency, you will not be qualified for filing. If the counselling agency recommends other solutions, then the borrower must try out the alternative solutions first instead of seeking bankruptcy right away.
An applicant for bankruptcy will be required to go through the Income Means Test to determine the type of bankruptcy he/she is eligible for. Bear in mind that only a Chapter 7 Bankruptcy discharges a borrower from all debts. Meanwhile, Chapter 13 Bankruptcy subjects the borrower under a mandatory five-year repayment plan.
What are alternative solutions for bankruptcy? Your credit counsellor can give you advice on possible solutions that you can consider. Perhaps a counsellor can suggest consolidating your debts with secured loan. Your counsellor may also arrange to negotiate with your creditors to reach debt settlement. If your debts are primarily made up of outstanding balances from your credit card accounts, you may be advised to get a balance transfer card with zero interest rate so you can get concentrate on your debt repayment. These are just possible solutions that you can try aside from bankruptcy.
What If Bankruptcy is A Must?
If your credit counsellor suggests that filing for bankruptcy is your best option, then consider hiring the services of a lawyer who specializes in bankruptcy cases. Preparing the paperwork can be more complicated than you think. Having a lawyer to assist you will ensure that your bankruptcy application will get approved at the soonest possible time.
Once discharged from your debts through bankruptcy, you will need to work on rebuilding your credit history right away. Remember that bankruptcy will erase all the past credit history that you tried to build in the past. To regain a good credit standing, you will have to start applying for new credit once again and this time, see to it that you can keep up with your repayments.
Resources for YOU:
Liz Roberts is a freelance writer and loan consultant. The website BadCreditResources.com offers resources that specialize in providing bad credit loans and credit cards for bad credit.
Comments feed
