consolidated debt and secured credit

Will Bankruptcy Fix Your Problems?

Debt Consolidation and Credit Card Counseling

Contents

Will filing for bankruptcy solve your problems?

Debt relief through the courts may or may not help. It’s all up to you

The law permits people who have debt that cannot be repaid to have those debts eliminated. This is intended to give people with financial problems a ‘fresh start.” Depending on your circumstances, it may or may not help you. The big factor in whether or not it helps you is what you do after you have your debts wiped out

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bankruptcy victim

Bankruptcy is not a cure all. It may or may not help you

Americans have a record amount of debt and remain notoriously poor savers. It’s so much easier to buy whatever you want now with a credit card and worry about how you are going to pay for it later. It seldom occurs to people to save their money and pay cash when they could use the credit card and get it now. That’s fine if you have the discipline to pay off your credit card debt when the bill comes in the mail instead of letting your debts pile sky-high while accruing interest at 20% or 30% per year. What happens if you do this and you lose your job, have an accident or are struck by a lengthy illness? What do you do then if you cannot pay your bills?

As tens of thousands of people discover each year, you can arrange to have all of your personal debts wiped out by filing for bankruptcy. Federal law permits people who have demonstrated that their debts far exceed their ability to pay to have their debts eliminated through bankruptcy. The debts are forgiven, the creditors have to write them off as a loss, and the consumer is given free reign to start his or her financial life over again. The process isn’t painless; since 2005 the regulations regarding who can file and how it is done have become far more cumbersome. Worse, the fees for filing for bankruptcy have increased, and may do so again. Attorneys who handle bankruptcy cases have become swamped with work and are charging higher rates than ever. While it is possible to file for bankruptcy and get debt relief, it is far from easy.

Having your debts forgiven by the courts is just part one of financial recovery. Once your debts are gone, new problems will surface. Your credit report will be tainted; the bankruptcy filing will remain on your credit report for ten years and every future would-be creditor or lender will be able to see that you once filed for bankruptcy. Given that lenders like to be paid, some of them will probably shy away from doing business with you in the future. Those that do agree to extend credit or lend money to you will charge higher interest rates for their services.

The elimination of your debts will not help you one bit if you fail to realize how you got into trouble in the first place. Resorting to old habits and failing to realize how you got into trouble in the first place will only lead you down the path to financial ruin again. It’s worse the second time, though. Once you have gone through a bankruptcy filing you are forbidden to do so again for eight years

Bankruptcy can help you if you have been victimized by a one in a lifetime event. If you simply suffer from bad spending habits, it won’t help you. You have to help yourself.

 

 

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