Is Bankruptcy a Viable Option?
Many of you are wondering if bankruptcy is a viable option. If so, they also wonder if filing for bankruptcy will destroy them financially for the next seven years.
Whenever I get asked about bankruptcy, I consider the emotional and financial stress of the person asking the question. No one wants a negative credit history or to be known as an irresponsible person not worthy of credit.
Your past credit history is no longer a stumbling block. Here are some reasons bankruptcy may be a viable option for you.
If you have creditors calling you at all hours of the day and have bills piling up faster than you can pay them, filing for bankruptcy has crossed your mind. While you should always repay debts you owe because it is the right and responsible thing to do, filing for bankruptcy may be the only way you can make a clean break from your overwhelming financial crisis.
Depending on your beliefs, you may never feel bankruptcy is a viable option. But sometimes bankruptcy is the best option available to you.
If you are struggling financially and wondering, “Is bankruptcy a viable option?” consider other alternatives:
1) Debt consolidation. It allows you to combine all your debts into one loan. One payment is certainly better than multiple payments or robbing Peter to pay Paul.
2) Loan modification programs and reductions in payments are another option for distressed homeowners. Contact the hardship department for your creditors and ask them to consider a change in terms to help you make it through the financial crisis you are experiencing. Some banks are willing to accept reduced payments. They know that many people are teetering on the verge of bankruptcy. In fact, you might want to call your mortgage lender and ask: “Considering my current financial distress, is bankruptcy a viable option or can I qualify for a loan modification program?” Rather than having all your debt discharged during a bankruptcy, many creditors will simply lower your payments. After all, something is better than nothing.
“Should I file for bankruptcy if none of these options are available?”
If you have exhausted all options, you might want to consider filing bankruptcy, especially if you face the possibility of losing property. Bankruptcy enables many people to hold on to their property despite their financial woes. When considering bankruptcy as a viable option, evaluate your finances. If you are overwhelmed by debt and cannot pay the minimum balances due, bankruptcy can stop creditors from charging late fees and interest on your bills. It will also give you the opportunity to make a fresh start. Emotionally, you’ll feel better because you won’t have to worry about harassment from creditors, losing sleep, and worrying about your debts.
Please know that a bankruptcy will definitely lower your credit score, but if you cannot repay your debts, your credit will definitely suffer after several more years of collection notices and repossessions.
Once you declare bankruptcy, the next step is rebuilding your credit. Increase your credit score by changing your spending habits and paying your bills on time. You will slowly regain financial stability. In fact, if you are diligent about repairing your credit and establishing good financial habits, you might even qualify for a home loan within two years of declaring bankruptcy!
Ultimately, your question, “Is bankruptcy a viable option?” is a personal one. You must learn how to create a budget, consider all of your bankruptcy options, and then make a strategic choice. If bankruptcy is eventually inevitable, begin the process today so you can start rebuilding your future and your credit score.