Declaring bankruptcy is no longer a viable option for starting over anew when you face severe financial pressure and you are unable to pay your debts. It should be considered the final action to take when you have exhausted all other means and when everything else has failed.
One of the biggest drawbacks with declaring bankruptcy is that is stays on your credit report for ten years. It sends a signal to potential creditors that you are perfectly fine with walking away from debts that you cannot pay. That can tend to send up danger signals to creditors, as in many people's opinion if you have done that once there is no reason why you will not do it again. In other words, having that on your credit report for ten years is like a warning flag to potential creditors and it can be very difficult to persuade them otherwise.
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Other reasons for avoiding bankruptcy include the fact that it goes on the public record so that anyone at any time in the future can discover that this happened to you. There is also the hassle of having to go to appear in the Federal Court for at least one hearing, possibly more and the general disruption that this type of activity can have on your personal life.
There is another viable option that is far better than going bankrupt and that is debt settlement. With debt settlement, either you or an agent or attorney will approach creditors and negotiate the amount owed them. While this only works with unsecured loans, it is a great way to lessen credit card debts and personal loan payments for example. In many cases the amount owed can be cut back up to fifty percent. The reason creditors are willing to do this is because they would far rather receive some payment rather than have you renege completely on your payment and they not receive anything at all. At the same time as the debt is renegotiated, the payment plan can also be adjusted to something that you can handle more easily.
While debt settlement may not work in every case, it is a very good option and something that anyone who is considering declaring bankruptcy should look into. You will probably need financial advice in order to make a well rounded decision. Debt settlement agencies are usually very helpful in evaluating your situation and many will even offer you a refund or refund fees to your attorney in the event that the debt renegotiation does not work out.
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