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A Few Things To Consider
When Contemplating Bankruptcy |
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Most experts recommend that if you cannot pay back outstanding consumer debt
in 3-5 years, bankruptcy may be the best option for you. (Of course, that doesn't
include long-term loans like mortgages, which are normally repaid in 15-30 years.)
Of course, bankruptcy isn't an "easy" out--depending on which kind you file, it
can make it difficult for you to obtain new credit for up to 10 years, a
consequence that must be weighed against the benefit of relief from your debts.
You can read about the differences between Chapter 7 and Chapter 13 bankruptcy
at www.creditmatters.com/articles/011099_137.asp.
Before you decide whether or bankruptcy is right for you, you may want to speak
with a credit counselor about your situation and what other options there might be.
Just keep in mind that most credit counseling agencies are funded by credit card
issuers and other lenders, so their leaning is always away from bankruptcy, even
if it may really be the best option for you.
For credit counseling, you may want to enlist the aid of a local branch of the
nonprofit National Foundation for Consumer Credit (NFCC). The NFCC offers free
or low-cost debt counseling, financial education, budgeting assistance, and other
financial services for consumers. To locate an office nearby, you can check the
NFCC web site at http://www.nfcc.org
or call toll-free 1-800-388-2227 for 24-hour automated office listings.
The NFCC also offers Debt Management Plans that can sometimes lower your payments,
fines, or interest. A Debt Management Plan offers a systematic way to pay down
outstanding debt. You would deposit your debt repayment funds with the agency
each month and the NFCC would disperse the funds to your creditors according to
repayment plans it negotiated with them. The NFCC can often negotiate reduced or
waived finance charges and fewer collection calls, so you might be able to bring
your debt under control more quickly.
For more information on debt management, you may wish to visit our web site at
www.creditmatters.com/channels/debt_management.asp.
Copyright © 2000, CreditMatters.com
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