When credit card debt starts to take over your life, you can start looking for desperate solutions to prevent complete financial collapse. One of the options that people think of pursuing is bankruptcy. While bankruptcy may be able to help you reduce or eliminate your credit card debt, it can also have long-lasting negative effects.
What is Bankruptcy?
The myth about bankruptcy is that it is a magical solution to your credit card debt problems. Many people think that a bankruptcy judge waves his hand over your debt and it is gone. The reality is much less mystical and quite intimidating.
The truth is that bankruptcy is a court-monitored debt restructuring program that makes you responsible for your debts. The courts examine your debt situation and then determine how much you will pay to each creditor. Your assets are liquidated, and then you are put on a payment plan that you have to pay to the court each month.
Is it Free to File Bankruptcy?
When you file bankruptcy, you have a list of charges to pay that include filing fees, court-ordered credit counseling sessions, lawyer’s fees and other court fees. It is actually extremely expensive to file bankruptcy, and there is no guarantee that your filing will be accepted by the court.
Do I Lose Everything?
The courts will go through a list of your possessions and determine which possessions are to be liquidated to pay towards your debt, and which possessions you will keep. Some items, such as a car and your house, can be considered exempt and not part of the bankruptcy.
What are the Long-Term Effects?
A bankruptcy stays on your credit profile for at least 10 years and can prevent you from getting approved for car and home loans. If you are applying for a job that requires you to handle money, then that bankruptcy may stop you from getting the job.
In some cases, organizations like cellular phone service providers and auto insurance companies may deny you service because of a bankruptcy. If an apartment building landlord requires a credit check, then your bankruptcy could also cause you to lose out on a place to life.
Exploring Your Options
Bankruptcy should be the very last option you consider when it comes to solving your credit card debt issues. Your first consideration should be to talk to a debt settlement professional and develop a plan for handling debt issues that does not involve bankruptcy.
The first thing that a debt settlement professional will do is sit down with you and create a comprehensive financial profile of your situation. This will allow the debt expert to see the extent of your credit card debt and develop a plan.
Another benefit of debt counseling is that you will learn how to create your own household monthly budget. This will be the tool that you use to prevent debt issues in the future and learn how to live within your means.
The next step in the process of getting your debt reduced without using bankruptcy is to get started on a debt negotiation plan. Your debt relief expert will contact your creditors on your behalf and negotiate payoff amounts for each account. On average, these payoff amounts wind up being 50 percent less than your balance.
As you strip away 50 percent of your credit card debt, you will begin to see how you can solve your debt issues without having to resort to bankruptcy. The average debt settlement program requires approximately 48 months to be completed. When the program is over, you will be debt free and able to handle your debts.
Debt negotiation does not require you to have great credit. That makes it a service that is available to any consumer that needs it. The debt settlement process is simple and handled by a financial professional. It is not going to cause you the same level of stress and financial hardship that a bankruptcy would cause.
When people consider options to handle their mounting credit card debt, they often turn to bankruptcy. The problem is that most people can reduce their debt without ever having to resort to bankruptcy. When you start working with a debt settlement expert, you can see immediately how your problems can be solved without using something as risky as bankruptcy.
We have years of experience in helping consumers to get their credit card debt under control without having to resort to bankruptcy. Our experienced debt relief professionals can help you develop a comprehensive financial analysis that will show you how much you can save by using a debt settlement program.
Call us today, and let us show you how you can avoid the potential pitfalls of bankruptcy by reducing your debt through debt settlement.