subject: Why Bankruptcy May Be Your Best Option [print this page] For many people, bankruptcy is a final option; one they would never consider unless they ran out of every other possible idea on getting out of debt. They will let their house go into foreclosure, let their credit cards compound interest for months and even drain their retirement accounts trying to stay afloat. It always seems taboo to even mention the word bankruptcy. However, as the recession roars on the economic climate is changing in many ways. Bankruptcy is no longer the unmentionable it used to be.
There are quite a few reasons why bankruptcy is your best option when your debt is stacking up:
Bankruptcy is better than Foreclosure Allowing your house to go through the entire foreclosure process can look even worse to creditors than filing for bankruptcy. Why? Filing for bankruptcy shows that you care; you owe your creditors and you plan on paying them back either by restructuring your debt or by liquidating. Allowing your home to be foreclosed on shows that you didnt exercise any of your optionssuch as filing for bankruptcy or even short-selling your house.
Bankruptcy is better than a Short Sale Filing for bankruptcy may actually save your house from either a foreclosure or a short sale. Unless your house is your only major debt, short selling your house will only add more trouble to your money problems. When you short sell your house, youre basically selling your house for much less than what you owe on the loan. Sometimes the lender will forgive the short payment of the loan, but if your money problems are elsewhere, you just lost your home and still cant pay off your debts.
Bankruptcy is better than using Retirement Funds NEVER use retirement accounts to get yourself out of debt. It may seem like a smart idea to begin with, but unless you can get out of debt with one payment, youre digging yourself into a bigger hole. Every time you withdraw from your retirement account, you pay additional penalties and sometimes taxes. You can quickly deplete your retirement savings by making multiple withdraws. Additionally, if you end up filing for bankruptcy anyway, youve just drained one of your only exempt accounts. Thats right, retirement accounts are exempt from bankruptcy. Thats why unless you can save yourself from financial burden, pulling from your retirement account is not nearly as smart as filing for bankruptcy. For more information on bankruptcy, contact a San Antonio bankruptcy lawyer as soon as possible.
