While bankruptcy may sound like a good option in terms of short-term financial planning, it is certainly not good for your long-term financial goals. After surviving bankruptcy, you will need to create a new life. In order to do that, you will more than likely need credit to help you buy what you really need and improve your employability. Not to mention that bankruptcy will attach stigma to you as you will have to face 10 year long mark on your credit that will become a part of public record . Thus, bankruptcy should be your last resort.
Debt management plans will help you eliminate your debt
Debt management plans are better option than bankruptcy because they help you get out of debt faster. Debt management plan may be the best option for those who are in financial trouble. Debt management plan is a more efficient way of getting out of bankruptcy. It is a wiser option than filing for bankruptcy as once you eliminate your debt, your credit score and history will eventually improve. This will help you to obtain better rates on loans in the future.
Seek assistance from credit counseling organizations. There are a number of credit counseling organizations that help indebted people to create a plan to get out of debt. Using a debt management plan is costly as it has fees associated with it but is the most cost effective way to pay back your debt.
Use bankruptcy as your last resort
A lot of people file for bankruptcy thinking they have no assets to lose and thus consider this an easy way out of a debt situation. However, declaring bankruptcy is never the easy way out of a debt as by declaring bankruptcy, person’s creditworthiness is damaged and they can’t get other loans to start over. If you as a debtor have certain assets that you would rather not hand over, then debt management plan is certainly a better option for you.
Bankruptcy is basically a repayment plan grounded on the financial capability of the debtor as determined by the courts. Bankruptcy is not better than a debt management plan as there are court costs and attorneys fees associated with bankruptcy in addition to having to pay the money back.
Getting out of debt is harder than getting into debt, but you have no other way out if you want to get your finances back in shape. This experience will teach you a lesson on how to manage your money in a more responsible manner in the future.