There are several myths about bankruptcy and the perils of filing. However, bankruptcy is often the best option for many debtors. Nonetheless, each individual contemplating obtaining debt relief through bankruptcy, should seek the advice of an attorney to determine if bankruptcy is in his or her best interest.
Bankruptcy may seem like an attractive option since it can provide immediate debt relief, but because bankruptcy has long-term consequences other paths should be considered before deciding whether or not to file.
If the debtor has fallen into temporary financial difficulties, before filing for bankruptcy, he or she should contact the creditor to see if they are willing to adjust the payment schedule. A creditor who knows the debtor is having trouble making payment may accept smaller payments or extend the payment period. Further, if the debtor has made prompt payments and stayed current in the past, creditors may be open to making an adjustment to payment schedules. Additionally, if the possibility of bankruptcy is raised, creditors may be receptive to an adjustment because in bankruptcy, the creditor may only be able to recoup a portion of the money owed. Sometimes it is in the creditor’s best interest to adjust the payment to try to obtain all the money owed from the debtor.
It is often easier to make one payment to one creditor. Having one bill as opposed to several can help the debtor focus on making the single payment each pay period. As a result, another viable alternative to bankruptcy is consolidating debt. Several companies are available to consolidate loans. These companies may offer the opportunity to combine debt under one creditor or transferring debt to a low interest credit card.
If the debtor’s financial situation is not likely to improve in the near future, the debtor should start considering bankruptcy more seriously. Bankruptcy provides the honest debtor with an opportunity to be free from overwhelming debt and have a fresh financial start.