Debt Relief Options - Why Bankruptcy Should Be Your Last Debt Relief Method

Debt Relief Options - Why Bankruptcy Should Be Your Last Debt Relief Method

Bankruptcy was widely practiced until the US economy was effected by recession. This method was used by the consumers to eliminate debt because it was capable of eliminating the debts of the consumers in full. However, the gruesome economic condition led to a situation where the economy could no longer depend on bankruptcy as a method of debt elimination because of the fact that as more and more people filed for bankruptcy, the creditors became financially weak and the result of such weakness showed up on the economy as a whole. The economy became weak and the problem of recession overshadowed every move made by the government to overcome the situation.

But what happens to the consumers? Why is its suggested that bankruptcy should be the last option for debt relief to be used? There are multiple reasons for this suggestion. They are mentioned below.

The major concern for the consumers is the loss of credibility and decrease in FICO score. This means that once the consumers successfully file for bankruptcy, they will not be able to get any further loan from any creditor as the record of bankruptcy will show up on the credit history of the consumer for a period of 7-10 years. Once that period is over, the consumer will be able to get further credit but it will be subject to higher rates of interest. This means that the consumers are reduced to the status of sub-prime consumers once they file for bankruptcy and they cross the period of 7-10 years.

The consumers are now supposed to first qualify for bankruptcy. It is no longer that people wish for bankruptcy and they are allowed to file for bankruptcy. They need to meet the criteria of means test and once they clear the test, they are allowed to file for bankruptcy. Unfortunately most of the consumers fail to pass the test.

With bankruptcy there are numerous legal hassles which the consumers need to handle. They need to visit court and be in touch with the attorneys regularly.

Bankruptcy is a very lengthy process and it can take more than 5 years to complete. This is the lengthiest process among all relief methods and hence many people are looking for alternative.

Overall, it can be said that bankruptcy is one of the worst decisions that consumers can make. It is true that the entire debt of the consumers get eliminated but there are other associated problems which the consumers fail to cope with. It is therefore, the option of bankruptcy must be kept as the last option.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.

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