When you are struggling with debts, it’s important that you choose how you want to move forward and eliminate them. You have two main options, which are to enter into bankruptcy or seek debt relief through other methods.
If debt is overwhelming you, you may not see a way out. Either of these options could help, though. Which one is right for you? That depends on your exact circumstances, but for most people, bankruptcy is a good option.
Bankruptcy: Why it is better than debt-relief options
Bankruptcy is better than some other kinds of debt-relief options for a few reasons. First, bankruptcy has the potential to allow you to settle for less than you owe and to have remaining debts discharged. Bankruptcy tends to be faster than other debt relief methods, and it may have little to no impact on your credit if you have already missed payments on your debts and had those debts go to collections.
Bankruptcy can help you keep your property, stop harassing calls and letters, prevent foreclosure and stop wage garnishments.
On the other hand, there are debt-relief options such as asking to settle an account for less than is owed or placing your debts onto a consolidation loan. There are significant downsides to these options, though. For example, to settle for less than you owe, you will need to make an offer that is reasonable to the creditor. Additionally, you will likely need that money available in a lump sum.
If you want to pay off your debts and put them onto a consolidation loan, you may find that you don’t qualify for the loan you need due to your credit score. If you do qualify, you may find that the interest rate is high or that the payment is still unmanageable.
Whether you choose bankruptcy or debt-relief options of other kinds, it’s a good idea to look into each of them carefully before you choose. Your attorney will go over your situation with you and let you know what they think is the best path forward for you, so you can protect as much of your money and as many of your assets as possible.