Why Bankruptcy May Not Be Your Best Option


You are in a position of needing to consider bankruptcy based on your current financial situation. Hopefully you have learned some lessons along the way in getting to this point, like about how do strike deals, when to get statements in writing from partners or customers, how to plan more carefully for the needs of your company so that you do not grow too fast. Whatever the reason, you got to this point and are now considering filing for bankruptcy.

You need to be fully aware that filing bankruptcy should be your absolute LAST course of action, and only taken after you have thoroughly exhausted all other alternatives. There are probably more excellent reasons to NOT file bankruptcy than there are good ones. While bankruptcy may be your only viable option, you need to ensure that you have exhausted all other viable options first.

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Be aware that filing bankruptcy is going to be a huge red flag on your credit report for the next 7 to 10 years. There is nothing you can do about it, and that red flag is going to cause you to be turned down for loans and financing, or if you do get approved, the interest rate that the lender will quote you because he is "taking a chance" on you is going to be astronomically high. That means that it is going to take you longer and will also cost you more to get back on your feet, so consider your options carefully.

One of your options would be a debt consolidation loan. Many people like to live on a champagne lifestyle even though they only have a beer budget, and sooner or later that decision is going to catch up with them. A debt consolidation loan can help. You need to take all your outstanding accounts, add them all up, and then determine how much you need to borrow to get them all paid off. Do NOT borrow more than you need, because that can potentially get you into an even deeper hole than the one you are in now. This approach has the advantage of just paying ONE loan payment at the end of the month, and although the interest rate on that loan may be higher than what you would like to see, it is probably less overall interest than if you were to pay each creditor separately, so you are actually saving money, as well as keeping your creditors happy.

The other positive aspect of a debt consolidation loan is that the total amount you are paying per month is probably going to be significantly less than if you made separate payments to each of your creditors every month. For example, say you are paying out $3000 if you paid each of your creditors individually, but after a debt consolidation loan, your total payment is now only $2000. That extra $1000 every month may give you enough breathing room to where you can hold on until things start to turn around for you, without filing for bankruptcy.

Another thing you need to do is to keep an eye on your credit report. You have been treading water financially for awhile, but there is no sense in allowing your credit report to make you look like you are in a worse position than you really are. Your credit report almost certainly contains errors, and you should visit Improve Your Credit Score to find out how to improve your credit score and win your disputes with the credit bureaus.

If you are having trouble managing credit, you should make an appointment with a credit counselor. These are usually non-profit organizations whose job it is to help you make better decisions about credit and to help you see a way out of your current situation. These organizations have helped thousands of people get on the right path, and they can help you also.

If you feel that you have exhausted all possibilities and bankruptcy is the only one left staring you in the face, be sure to do it the right way. At our site is a free form you can complete to get more information about bankruptcy from a bankruptcy lawyer who is local to you, and who knows your state's laws concerning bankruptcy. This is a huge step with a lot of complications, so it is not something you should want to do on your own without legal assistance.


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