Contrary to what most bankruptcy attorneys will tell you, filing bankruptcy is almost never the best answer. Bankruptcy leaves a serious stain on your credit report for ten years, and - under new laws passed by Congress - filing does provide the same benefits that it used to. In all but the most extreme cases, settling your debts outside of court is vastly preferable to filing bankruptcy.
If you are consumed with debt to the point that you have considered filing bankruptcy, you should contact a debt management company. Compare the options that you hear from a debt management firm to what you hear from your bankruptcy lawyer, and use the information to decide which path is best for you.
Other reasons to contact a debt management company:
- You have so many monthly bills from so many different creditors that it is difficult to keep track of payments.
- You have recently been turned down for a loan because of excess outstanding debt.
- You are unable to pay your bills on time and in full.
- You have fallen behind on your student loan debts. (Federal student loans cannot be "discharged" by bankruptcy.)
- You have resorted to using a payday loan service or pawnbroker in order to make monthly payments on outstanding debts.
- You have accounts that have been sent to collections.
- You have credit cards that have been canceled or "charged off".
Bankruptcy may be your best option if you have debts that you realistically cannot pay in your lifetime, such as medical debts in excess of several times your annual income. For most other situations, however, enrollment with a debt management company should be sufficient. The firm you choose maywork with your creditors to consolidate your bills, or may establish an individualized, workable plan for you to manage, reduce, and ultimately eliminate your debt.
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