Our culture often seems to push the average American family toward bankruptcy if they are having trouble with overwhelming financial debt. This is a result of the lifestyle that we have become accustomed to over the past 30 years. We have allowed loans and credit to become the only way we feel like we can achieve the “American Dream”. If you find yourself deep in debt and looking for a way out, there are two primary options that you should consider.
When navigating debt and the path to financial freedom, you must know the differece between these two options, debt consolidation and bankruptcy. Debt consolidation allows you to gather your debts into one place and continue to pay them down, but on easier terms that are stretched out over a longer period of time. There are several types of bankruptcy and each with their own requirements and consequences. The most common types filed are Chapter 7 and Chapter 13 bankruptcy. Your individual financial situation determines which will suit you the best. Consult a bankruptcy attorney in your area to learn more about your options.
Recognize Your Financial Situation
Sometimes people think that their debt situation is much worse than it actually is. You should start by compiling a list of your liquid assets, including any trust funds, to see if declaring bankruptcy is the best way to get out of debt. Declaring bankruptcy means giving up your properties and any other assets. If that option is not something you want to pursue, you should find out what your debt consolidation options look like first.
A bankruptcy will remain on your financial record for ten years, which means your credit score will suffer. You will have to take the time to rebuild your credit in order to apply for new credit and loans, but if you have a steady income and are financially responsible, it is possible to repair your credit score within two years after declaring bankruptcy.
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