Bankruptcy as a last resort

By Nicholas Hall

With foreclosures at an all time high and rising at a disturbing rate, and with consumer debt is over $2.5 trillion dollars many people have turned to bankruptcy as a last resort. There are a few things that you should know about bankruptcy before filing. It isn’t a way out of your financial troubles, but in many cases it may help out.

It is important to first understand what bankruptcy is. The first thing you should do is get the statistics, you need to understand the numbers and the consequences. Declaring bankruptcy will really hurt your credit score, making it very difficult to secure loans and financial help for at least 10 years. This will also hurt you chances of getting a new job or getting insurance. Declaring bankruptcy will also not get you out of paying your mortgage or car loans, so make sure you consider that.

Before even thinking about filing you should go to a credit counselor to discuss any possible alternatives, remember this is a last resort. If nothing else, declaring bankruptcy will at least delay foreclosure or payments until you have better means of payment. Make sure you know the rules and understand exactly what you are getting yourself into. Bankruptcy won’t dissolve all your debts; make sure it is the right move for you.


Sources:

http://money.cnn.com/2008/08/22/pf/saving/toptips/index.htm

http://money.cnn.com/2008/10/24/pf/bankruptcy_filings/index.htm

http://money.cnn.com/2009/01/05/news/economy/bankruptcy_2008/index.htm