Tag: bankruptcy

Automobile Loans After Bankruptcy

Qualifying for automobile loans after bankruptcy might seem daunting and impossible. It may seem that any hope of returning to normality or obtaining something as basic as an auto loan may be completely out of your reach. However, one of the important bankruptcy facts to keep in mind is that by implementing some stiff changes in your behavior and budget, you can repair credit after bankruptcy and expand your opportunities.
Once you exit the bankruptcy process, you may need to acquire a car. Bankruptcy will be a major impediment to your goal, but you do have options. The first and best way to get automobile loans after bankruptcy is to begin to learn how to fix credit after bankruptcy, building up your score high enough to enable you to get a good loan. With bad credit, you may only qualify for a loan with a high interest rate, which will only encourage the likelihood of default or another precarious financial tailspin.
If your need to acquire a car is more urgent and you cannot wait to rebuild your credit and qualify for automobiles loans after bankruptcy, you have several options, most of which can net money that you didn’t know you had. Start by tracking your expenses and learning how to create a budget. You might be able to get rid of several costly items that are draining your money: $5 lattes, valet parking, and even eating out several times a week. Just by picking up some skills behind the stove, you might increase your income by $30 a week. By taking a second job, you will lose some free time, but you can add $300 to $500 a week with a part-time, minimum-wage job. You may not want to work 60+ hours a week forever, but if you are able to afford a new car, it might be worth it for a little while.
Another opportunity for adding to your income can come by asking your boss for an advance on your paycheck. Your employer may be more likely to grant you a loan, plus these type of loans usually don’t have any interest attached to them. However, before you ask your boss for a raise, be prepared to answer some of these questions, including the reason you need the loan, how you will repay it, and why his company should consider doing this. You might also ask a family member to grant you automobile loans after bankruptcy, and you should expect to give them the same solid reasons for giving you the money, maybe even by offering better interest rates than they are accumulating in a savings account.
Credit unions and local banks are also great places to obtain automobile loans after bankruptcy. They may be likely to offer you better terms and lower interest rates than a mainstream lender, particularly if you have already have established a relationship there.
You can consider obtaining a co-signer for a loan, though you will have to give them some special provisions to safeguard the risk they will be absorbing. For example, you might consider giving them the ability to control the payments or access the account online so that they will feel more confident. Though it is a risk, you could offer to pay the co-signer two or three months in advance. They could just take the money and run, but when have poor credit, you don’t always have the luxury of perfect solutions.
Credit repair always your best option. However, if you take a look at your situation and recognize the opportunities around you, you may find plenty of opportunities for automobile loans after bankruptcy.

Bankruptcy and Student Loans

Those looking to wipe the slate clean and start anew might be disheartened to learn the bankruptcy facts about bankruptcy and student loans.
As you review your assets in preparation for bankruptcy, you may be wondering how many debts you will be able to discharge. If you are like most people, you might still have some student loans left to pay. Unfortunately, the law surrounding bankruptcy and student loans states that you cannot discharge your student debt obligations in a bankruptcy filing.
Bankruptcy and Student Loans Fact #1: You cannot discharge student loans in a normal bankruptcy.
Even though you can have credit card, mortgage, and auto loans discharged during bankruptcy, some debt obligations will stay with you through bankruptcy. You are still responsible for paying alimony, child support, taxes, fines, and student loans through the bankruptcy process. Like the other listed responsibilities, student loans are considered exempt from the bankruptcy process, whether they are federal loans or private student loans. In the case of federal student loans, the government can seize your tax refund or garnish your wages to make sure it collects its money.
In a few situations, student loans can be legally discharged, but they are rare. If you die or are declared 100 percent disabled, your student loan debts will be discharged, and your estate will not be responsible for your debts. In the case of disability, your credit score will not be harmed by the student loan discharge. If you attended a school that closed before you were able to complete your academic program, your student loans will be canceled, relieving you of the responsibility to repay them at all.
Bankruptcy and Student Loans Fact #2: You can request a hardship hearing.
When it comes to bankruptcy and student loans, you should also know this: You can request a hardship hearing during your bankruptcy and present your case to a special judge, requesting that the student loans be discharged. A discharge of student loans after a hardship hearing is extremely rare, but if you think you have a good reason why paying your school loans presents a hardship, talk to a qualified bankruptcy attorney.
Remember, though, that everyone declaring bankruptcy is having a hardship, so your situation will need to be particularly dire. Getting your student loans discharged is a little like getting out of jury duty!
Bankruptcy and Student Loans Fact #3: Some federal programs will pay your student loans for you!
Another interesting fact about bankruptcy and student loans is that you might be able to discharge your student loans by participating in federal programs that relieve some or all debt obligations in exchange for working in programs like Peace Corps, AmeriCorps, or Vista. These service programs might give you a flat amount of money or they could offer to shave a percentage off your loans. By serving in Vista or the Peace Corps, you won’t be making much money, but you could be relieved of as much as 15 percent of your student loans.
If you are currently struggling to repay your student loans, make sure you explore your bankruptcy options before defaulting, including debt consolidation loans. If you talk to your lender, you might be able to arrange a loan deferment or a forbearance, which grants you temporary relief by postponing your loan payments for a specified period of time. You can also work out a different payment plan with your lender to help you make payments every month. Remember that removing a student loan is all but impossible, so you might as well start finding ways to repay your student loans as soon as possible.
If you are struggling with bankruptcy and student loans, it stands to reason that you might have a poor credit score. One way or another, start learning how to build credit so you can build your credit score to 720 as quickly as possible.

Obtaining a Loan After Bankruptcy

Bankruptcy can be a staggering blow to your financial stability as well as your confidence, and you might think you will never qualify for a loan after bankruptcy.
Let’s start by talking about the bankruptcy facts. If you are like most people, you might feel hopeless and embarrassed. But declaring bankruptcy does not brand you a failure. Some prominent people who have filed for bankruptcy include Donald Trump, Walt Disney, and Henry Ford. As long as you dedicate yourself to fiscal restraint and learn about credit repair after bankruptcy, you can rehabilitate your credit score in a few years.
In fact, a careful campaign of credit improvement can even help you get a personal or business loan after bankruptcy in relatively short order. Follow the tips below and you will be well on way to obtaining a loan after bankruptcy.
Though a bankruptcy will severely damage your credit score, it also gives you a chance to rebuild your finances without looking over your shoulder and worrying about creditors. After filing for bankruptcy, your credit score will bottom out, and you will need to begin acquiring lines of credit and slowly improving your score. But first create a structured plan for recovery that allows you to work within your limits. Obtain a copy of your credit report and make sure all debts have been marked as “discharged through bankruptcy” and that all your accounts have a balance of zero.
Next, open new lines of credit so that you can demonstrate a newfound ability to responsibly manage your debt. Because credit-scoring bureaus place more weight on recent credit activities than your past history, your credit score will begin to rebound as creditors recognize a regular pattern of timely payments. Opening up lines of credit may be difficult at first, so you might need to use secured credit cards or become a credit card authorized user.
A secured credit card requires you to provide a cash deposit or access to a savings account as collateral for a new card. Secured credit cards frequently have high interest rates and low limits, but if you can create a history of responsible behavior, you’ll be able to transition to a regular card with corresponding benefit to credit score.
Another way to improve your credit score so that you can qualify for a loan after bankruptcy is to have a family member with good credit add you to an account as an authorized user In essence, you are borrowing this person’s good credit to improve your credit rating.
Soon after a bankruptcy, you will probably have to offer collateral to obtain a loan. If you have a car or a property, this could be enough to ensure a loan after bankruptcy. If you do obtain a loan without collateral, the odds are that interest rates will be relatively high. You can also accelerate your chances to secure a decent loan by making a sizable down payment. Like offering collateral, this offer will gain your valuable credibility and will help to reassure the lender that you will be able to carry through on your loan payments.
Though bankruptcies once prevented borrowers from receiving loans for 10 years, or the time it takes for a bankruptcy to be erased from your record, you may now be able to obtain a personal or business loan after bankruptcy within two years, providing you are assiduous in carefully building your credit. Be sure to create a plan for yourself and start a new, healthy pattern of promptly paying your debts on time by learning how to fix credit.

Credit Inquiries After Bankruptcy

If your credit score is trashed, the last thing you probably want on your credit report is a bunch of credit inquiries after bankruptcy. Won’t this tell the credit-reporting bureaus that you are planning on returning to your old habits?
To some extent, yes. Each time you apply for credit, a creditor makes an inquiry into your credit report, and this causes your score to drop. One of the bankruptcy facts is that the credit-scoring systems will be keeping an eagle-eye on your behavior, and applying for credit is a big warning sign that you are up to your old habits.
So what are your supposed to do? Live as a cash-only citizen? This might sound good in theory, but it is highly impractical. You can barely get a cell phone without a credit card, much less reserve a hotel room or a rental car.
The truth of the matter is that credit inquiries after bankruptcy are a necessary part of building credit. The key is to be strategic about how you open new lines of credit and deal with credit inquiries.
The strategy might shock you. In short, your strategy should be to get it over with. Apply for all the credit you will need, and get all the credit inquiries on your credit report at once. I have three reasons for this:
Credit Inquiries After Bankruptcy—Fact #1: You need to start to repair credit after bankruptcy as soon as possible. This means you need to open credit cards, and you need to start building a positive credit history that shows the credit-scoring bureaus that your bankruptcy allowed you to start anew.
Credit Inquiries After Bankruptcy—Fact #2: Credit inquiries stay on a person’s credit report for only two years, but they affect a person’s score for only one year. If you have declared bankruptcy, your credit score is already trashed. Get the credit inquiries over and done with now rather than waiting to tarnish your credit report later. In fact, the only way to get your score to increase is to apply for credit and use it wisely.
Credit Inquiries After Bankruptcy—Fact #3: Every time you open a new account, the average age of your credit history drops. And credit-scoring bureaus like older accounts more than they like newer accounts. If you apply for new credit today, the accounts will be a year old this time next year. If you wait to apply for new credit, the accounts cannot start growing old because they do not exist.
Let’s take a look at how this works by considering Andy and Bob. Both of them have declared bankruptcy. Both of them decide to open three new credit cards as part of their plan to rebuild credit. But they go about it differently.
Andy decides to just get it over with, so in 2010, he opens three credit cards. By 2013, the inquiries had fallen off his credit report. And the average age of his credit accounts was three years.
Bob decided to open the credit cards in stages. He knew that credit inquiries count for about 10 percent of a person’s credit score, so he wanted to space out the damage. By 2013, he had three credit cards: one that was a month old, one that was 13 months old, and one that was 25 months old. The average age of his accounts was just 13 months.  And he had a recent credit inquiry that was being factored into his score.
And guess who had the better score? Andy, who knew that credit inquiries after bankruptcy were necessary.
One thing to keep in mind about credit inquiries after bankruptcy: Your score will never be damaged if you pull your own credit report. The credit-scoring bureaus know that people need to monitor their own credit scores, and they consider this responsible behavior. If you need to pull your credit score, be sure to read this article about the credit score scale.

How to Remove a Bankruptcy From Credit Report

Question: Can you give me the specifics on how to remove a bankruptcy from credit report?
Answer: This blog post is going to be completely different than every other blog about how to remove a bankruptcy from credit report.
Let me begin with one assumption: Your bankruptcy is legitimate, meaning that you are not some victim of identity theft whereby the bankruptcy on your credit report belongs to someone else.
With that assumption, here is my answer: You cannot get it removed, and you should not worry about getting it removed. Let me explain.
1) You don’t need to learn how to remove a bankruptcy from credit report. Most people think that after bankruptcy, your credit is ruined for seven years.  That is simply not true.  If you reestablish your credit properly after bankruptcy, you can have a 720 Credit Score in just two years after the bankruptcy.
2) If you go through the process of finding out how to remove a bankruptcy from credit report, you will run into lots of unscrupulous organizations who will charge you to have the bankruptcy removed. The organizations that tell you that they can remove a bankruptcy from your credit report often offer a “100% money back guarantee.” The truth is that you won’t be able to get your money back. There are no legal ways to remove a legitimate bankruptcy from your credit report, so save you money and avoid these scams.
3) That’s right, it is illegal. According to the FTC, it’s illegal to get an item off your credit report that is correct.
Here is the one simple solution that works every time:  Reestablish your credit after a bankruptcy the same way you established credit the first time.  Just start now, don’t wait even one day.
Learning how to fix credit is simple, just keep in mind that it’s going to take you between 18-24 months to get a credit score over 720 assuming you do it the right way.  The biggest mistake people make is wiping their hands of all credit.
I would love to offer (free of charge) my video series on how to build credit and reestablish credit after bankruptcy. If you find my information valuable, then you can enroll into my program on establishing credit after bankruptcy.

Rebuilding Credit After Bankruptcy

Like a lot of folks who start trying to rebuild credit after bankruptcy, you might be thinking of wiping your hands clean of credit. And it might make sense that the fastest way to move past the bankruptcy is to stop relying on the loans and credit cards that precipitated the bankruptcy.
But contrary to popular belief, using credit appropriately in the wake of a bankruptcy is the best way to rebuild credit after bankruptcy. Of all the bankruptcy facts, this one might be the most important. Indeed, you might be able to build your score to 720 within a couple of years of declaring bankruptcy if you follow a smart plan to re-establish credit.
This twofold plan to learn how to fix credit starts by opening new lines of credit and concludes with paying your bills on time and in full.
Rebuilding Credit After Bankruptcy Rule #1: Open new lines of credit!
You might hear claims that you can have a bankruptcy wiped from your record. Beware of these claims! There is no legal way to wipe a bankruptcy from your credit report. That said, time does heal. The credit-scoring bureaus—Equifax, TransUnion, and Experian—are more concerned with your recent behavior than they are with your past behavior. The trick, then, is to persuade the bureaus to pay more attention to your recent good behavior than to your past behavior. By establishing new credit and using it responsibly, you can prove to the bureaus that you are a new person—that the bankruptcy forced you to change your habits and establish smarter financial strategies.
After you have declared bankruptcy, open three new credit cards (Visa, MasterCard, or American Express) and one installment loan as part of your plan to rebuild credit after bankruptcy. Taking out a car loan is not advisable, in part because of the high interest rates you would assume, but also because of the debt you would add to your credit report. Instead, buy a new appliance, piece of furniture, or electronic using an installment loan. Then pay the loan off within six months.
Keep the credit cards active by using them at least every other month. Make only small charges (preferably less than 10 percent of the limit), and pay the balances in full.
Of course, with both the credit cards and installment loan, be aware of high interest rates. Because of your bankruptcy, you will likely not qualify for the best interest rates, which is why I stress the importance of paying the balances in full as quickly as possible.
Another note about opening new accounts: Insomuch as it is possible, open these accounts all at once and as soon as possible after the bankruptcy. The credit-scoring bureaus respond best to accounts that have been open for long periods of time. Your future credit score will benefit best if you open the accounts now.
By opening these new lines of credit, you can begin to rebuild your credit after bankruptcy by giving the credit bureaus new information on which they can judge your creditworthiness. Show them you have changed your patterns of behavior.
In this way, you can immediately begin proving to the credit bureaus that the bankruptcy allowed you to turn over a new leaf and change your payment behavior.
Rebuilding Credit After Bankruptcy Rule #2: Never, never make a late payment!
After a bankruptcy, the credit-scoring bureaus will have an eye on you, even as your score begins to climb. If you make a payment that is even one day late, the bureaus will assume you are back to your old ways, and your progress will be for naught.
To best rebuild your credit after bankruptcy, you must pay your bills immediately every single month. This means that you must live within your means. Be sure to read our article about how to create a budget, find money, and establish habits that best afford you to bounce back after a bankruptcy.

How to File for Bankruptcy Without an Attorney

In an earlier post, we talked about how to find a good bankruptcy attorney to handle your bankruptcy; this week, we take a look at how to file for bankruptcy without hiring an attorney.
If your debts have grown too large to handle and you are constantly hounded by creditors, declaring bankruptcy may be the best way for you to make a new start. Most people hire an attorney to usher them through this confusing and complex process. An experienced bankruptcy attorney can also help debtors avoid costly mistakes or the forfeiture of their rights.
However, if you are financially strapped, you might be looking into how to file for bankruptcy without an attorney. This is called filing pro se.
The first thing you should know about filing pro se is this: Bankruptcy has serious long-term legal and financial ramifications. Before you decide to file pro se, make sure you do thorough research and avoid making mistakes that can deepen your financial problems. At a minimum, follow these six steps:

  1. Thoroughly research your bankruptcy options with respect to the different forms of bankruptcy available. Individuals usually file for either Chapter 7 or Chapter 13. Chapter 7 involves a liquidation of most of your assets to pay off your creditors, while Chapter 13 bankruptcy can mean working out a payment schedule with creditors, which may enable you hold on to your house or car. In our free teleseminar, we offer more information about the different types of bankruptcy that are available, as well as the pros and cons of each.
  2. Do your homework. if you want to learn how to file for bankruptcy without an attorney, be sure to read up on the United States Bankruptcy Code and Federal Rules of Bankruptcy Procedure, as well as any rules in their state. Each state has different bankruptcy filing procedures and rules, so you will need to do some research to find out the specific items required for your state. Visit your local court’s web site to become aware of any relevant bankruptcy procedures in your area.
  3. Schedule credit counseling. If you declare bankruptcy, you must first undergo credit counseling within 180 days prior to declaring bankruptcy. After completing counseling, you must furnish a certificate of completion from an approved provider.
  4. List all your debts. You must provide an account all your debts and assets in your bankruptcy schedules as part of form B200. If a debt is not listed, it may not be discharged, so be careful to carefully list all debts,  account numbers, and the name of the creditor. A bankruptcy judge is able to deny the discharge of debts if you destroy, defile, or obscure properties; fraudulently change records; or fail to tell the truth about assets. (Knowingly presenting false information during bankruptcy is considered a crime.)
  5. Watch out for problems. Filling out bankruptcy paperwork may seem relatively simple but avoid errors that could prove costly or cause your case to be dismissed. Make sure to list all your property, including assets like tax refunds and retirement funds and even intangible assets such as stock options and partnership interests. You should be careful not to bend the law in trying to transfer your assets to friends or relatives. Also, you may be able to find available exemptions for some of your assets.
  6. Seek legal help if you are unsure of any step along the way. If the process of learning how to file for bankruptcy without an attorney seems daunting or unclear, consider obtaining a bankruptcy attorney during and before the legal process. Many states offer free legal aid to debtors without financial resources, and you might be able to find a legal clinic or organization in your area that offers discounted legal assistance. Of course, you should always be on the lookout for bankruptcy scams!

Protecting Yourself from Common Bankruptcy Scams

If you are facing the pressure of mounting bills, creditors calling your home all day, and compounding interest payments pulling you more and more underwater, looking into the bankruptcy facts might be your best option, but beware bankruptcy scams!
Filing for bankruptcy can be a tricky process, and seeking the help of a bankruptcy expert is not a bad idea. Still, know that some unscrupulous companies will try to take advantage of your financial stress. Knowing what to look for will help you avoid these bankruptcy scams.
Some dishonest companies target people who are undergoing a bankruptcy. But instead of offering legitimate services, these bankruptcy scams profit from the desperation of people in the throes of financial crisis. These companies usually advertise on the Internet, in the newspaper, or directly contact people whose bankruptcies are indicated by public-record notices.
Some companies may charge you for services that you can do yourself. For example, these companies may charge you for pulling your credit report or finding a lawyer, two things you can do on your own, and probably for free. Other companies may offer to file a bankruptcy petition on your behalf. While there are some legitimate bankruptcy petition preparation businesses, many have a reputation for doing shoddy work and submitting petitions filled with errors. As a result, some judges may dismiss your petition outright, making an appeal difficult.
Even worse, many disreputable companies might make unlikely promises. For example, some will promise to remove your bankruptcy by working out a compromise with your creditors. You pay them a chunk of cash, which they promise to distribute to your creditors. When and whether they pay those bills is up for question. And more importantly, no one can remove a bankruptcy from your record!
The number one sign of bankruptcy scams is when the offer sounds too good to be true. There is no magic cure for bankruptcy. If the company is over-promising by saying they can make your bankruptcy disappear, they are not disclosing the full truth.
Also beware of any company that takes your money without informing you of your rights. These might be fly-by-the night bankruptcy scams who will disappear with your cash in their pockets. Call around and ask for referrals from bankruptcy attorneys and industry experts before settling on a bankruptcy company. You will likely have much more luck if you do the research rather than waiting for the company to find you.

How to Find a Good Bankruptcy Attorney

When you are filing for bankruptcy, hiring a bankruptcy attorney might seem like one more expense on top of a ton of other debts that are weighing you down. However, one of the bankruptcy facts is that a bankruptcy attorney will save you a tremendous amount of stress. You may even emerge from the process with more of your assets than you thought possible.
As you search for a good bankruptcy attorney, here are a few things to keep in mind.
Be careful not to fall victim to bankruptcy scams or bankruptcy mills, both of which will cost you money and cause more problems. Some disreputable operators will ask payment for things you can easily do yourself, and others, like bankruptcy mills, will often give you error-ridden, sloppy services that can make your bankruptcy more difficult to navigate. Most often, these operators will prey on your hopes and jeopardize your financial future. Instead, you should avoid cutting corners and make an attempt to find an experienced bankruptcy attorney who will help your case.
To find a good bankruptcy attorney:

  • Start by asking around. Look for referrals from any friends or family members who have experienced bankruptcy. If you do not have any personal friends or family members whom you can ask for a referral, call on professional contacts in the industry. Another attorney, a mortgage broker, a banker, or a real estate agent you trust can refer you to a competent bankruptcy attorney.
  • Do some research. Check with professional organizations such as the National Association of Consumer Bankruptcy Attorneys, the American Bankruptcy Institute, or a related local legal aid organization. Attend bankruptcy court and watch a few lawyers in action.
  • Ask for references and related credentials. Once you find a bankruptcy attorney with whom you are comfortable, check his or her qualifications. Call the references and makes sure the attorney’s background is a good fit. Because bankruptcy law is specialized, it’s preferable to hire a lawyer who exclusively works in the field and will have a good idea about recent trends in your state or city.
  • Interview no fewer than three bankruptcy attorneys. Ask prospective attorneys specific questions about their experience and workload. If for example, the attorney works on business bankruptcies, it may not be a good match for your personal bankruptcy. You should also make sure that you will have access to the bankruptcy attorney during the process. After all, you want to make sure the lawyer adequately addresses your case and doesn’t treat you like a number on the wall.

Of course, you can always decide to file without a bankruptcy attorney. But bankruptcy is a nerve-racking experience. A good bankruptcy attorney can help you navigate the process and put your life back in order. With the right attorney, your chances for getting on the fast track to financial stability are much better. And don’t forget: Once you have declared bankruptcy, start learning how to build credit so you can rebuild your credit score!

Keys to Avoid Bankruptcy

If you have lost a job or have experienced a financial catastrophe, you might be worried about your ability to pay your bills, wondering how to avoid bankruptcy. One of the unfortunate bankruptcy facts is that bankruptcy will leave a black mark on your credit report and will severely limit your options until you are able to repair credit after bankruptcy. Though sometimes it is the best choice to handle your financial situation, bankruptcy should be considered only after a thorough analysis of all of your other options that allow you to avoid bankruptcy entirely.
The most common trademark of those faced with an overwhelming amount of debt is the tendency to ignore the situation. By keeping your head buried in the sand, you are only causing the problem to worsen rather than seizing the opportunity to change your fate. Embarrassment is the reason many people give for the failure to address their financial problems. Unfortunately, some people may attach a stigma to bankruptcy, seeing as a sign of moral failing.
However, is you want to avoid bankruptcy, avoiding the problem is the worst thing you can do! And keep in mind that several prominent Americans, including Mark Twain and Walt Disney, have claimed bankruptcy. Sometimes bankruptcy may be precipitated by an unforeseen job loss, divorce, or medical crisis. Other times it may be due to poor business decisions or financial negligence. Whatever the reason, avoiding the problem will only make matters worse. The most important thing you can do is to decide to fight back because you do have options, even in the darkest of hours
To avoid bankruptcy, start by calling the hardship department for your bank. The incredible economic turmoil of recent months has lead to new priorities for the financial industry and newly available opportunities for you. Many banks are looking to work out alternative solutions instead of taking a huge loss. In the event of a bankruptcy, creditors will be left with nothing. Though lenders are not obligated to change the terms of your loans, by being proactive and asking, you might be able to work out an alternative payment plan or a loan modification to stave off bankruptcy.
In order to gain financial relief you might also consider consolidating your debts. Debt consolidation the combination of all your debts into one loan so that you make only one payment at a time. Depending on your circumstances, this can be a good way to regain stability and gradually repair your credit. You might also consider hiring a debt consolidation company, but be very careful or your money worries will be compounded by dodgy outfits that will rip you off.
Despite your best intentions, it may be impossible to avoid bankruptcy in some cases, and in others, considering all your bankruptcy options may be your best course of action. If you are trying to keep your head above water with a plan that is not working, bankruptcy might be preferable to more financial stress, harassing calls from collectors, and a burgeoning debt caused by an increasing load of interest and late fees. In this case, it’s easier to wipe the slate clean and start over. Additionally, depending on the type of bankruptcy you file for, you may be able to hold on to property.