| What is bankruptcy? | | | | fees and whose services may be of little value. |
| Bankruptcy is a process by which a debtor can obtain | | | | Consider utilizing a non-profit financial counseling |
| court-ordered relief from his debts. While bankruptcy | | | | service. |
| can be a valuable necessity in some cases, not | | | | "Working Out" Your Debts |
| everybody who faces financial difficulty should file for | | | | Some creditors will work with debtors, even waiving |
| bankruptcy. | | | | part of a delinquency or waiving interests on a debt, |
| Should I declare bankruptcy? | | | | provided the debtor agrees to make payments on the |
| There is no "quick and easy" answer to this question. | | | | debt. Sophisticated creditors know that some debts |
| You should discuss your situation with a credit | | | | can be hard to collect, even if you don't declare |
| counselor or a bankruptcy attorney, to evaluate the | | | | bankruptcy. Collection agencies often take a |
| costs and benefits of bankruptcy given your personal | | | | percentage of the debt they collect as payment, |
| financial situation. The type of debt you owe can be a | | | | litigation can be timely and expensive, and forcing a |
| significant factor. Factors which may affect your | | | | bankruptcy may result in an even smaller recovery. |
| decision to file for bankruptcy protection are detailed in | | | | Refinancing |
| this associated article: Filing For Personal Bankruptcy | | | | If you own a home, and have some equity in the |
| Protection in a U.S. Court. | | | | home, consider refinancing your home to pay off all of |
| What are the alternatives to bankruptcy? | | | | your high interest debt. You may be able to obtain |
| There are numerous alternatives to filing bankruptcy. | | | | long-term financing at a much lower interest rate, |
| Determining which, if any, are appropriate for you | | | | allowing you to consolidate your debts, lower your |
| depends in large part upon your personal financial | | | | monthly payments, and obtain a tax deduction in the |
| situation. It is a good idea to seek financial counseling | | | | process. |
| prior to making a decision as to whether to file | | | | Please be careful when dealing with companies which |
| bankruptcy, or regarding which alternatives may work | | | | offer to combine all of your debts into a single "low |
| for you. Possible alternatives include: | | | | payment" loan. Some of those companies collect large |
| Financial Management | | | | fees while offering a loan package that is inferior to |
| While it means giving up a great deal of control, you | | | | that which you could obtain through a bank or credit |
| may wish to utilize a financial manager to pay your bills, | | | | union. A poorly structured loan may leave you paying |
| and to put you on an "allowance," until your finances | | | | interest for years, while making essentially no progress |
| are back in order. This can be particularly helpful if your | | | | on paying down the principal of the loan. |
| financial problems emerge from bad spending habits. | | | | Avoiding Credit Repair Scams |
| You may also wish for a less intrusive form of | | | | Whether before or after bankruptcy, many people are |
| management, such as simply having a financial | | | | attracted to offers to "repair bad credit" or even to |
| counselor help you create a budget. | | | | "remove" a bankruptcy from their credit history. Most |
| Choose your financial counselor carefully, as there are | | | | such offers are fraudulent. |
| many self-professed counselors who will charge high | | | | |