Filing for bankruptcy will ruin your credit, but over time, it can be repaid. Some folks rush into filing for bankruptcy without even thinking about different pathways, such as debt consolidation, credit counseling and loan modification that can save a debtor’s credit score. While alternatives to bankruptcy exist, not every individual who decides to apply for these options will qualify because most folks may have too much debt to qualify or may not be able to produce the payments on their current salary with lower rates. Before you select an alternative, you must be positive it will help reduce or eliminate your debt, as sometimes it is better to just file for bankruptcy than lose money and time repaying an ever increasing debt. 

Credit Counseling

What some folks may find after consulting with a credit counselor is that after making a new financial plan, it is still going to be years before all debt can be repaid. Another issue you may find is that even after all the planning, your new plan has organized a new payment minimum, but even with the new plan it’s still going to take you multiple years to repay the debt. If you find yourself as one of the people who will take 15 or more years to finish repaying their debt, it might be a better option to just apply for bankruptcy. No matter what part of Southern California you hail from, you can find a lawyer near you; for instance, a Woodland Hills bankruptcy attorney may work for someone who lives in the L.A. area.

Debt Consolidation

Creditors dislike when individuals default on a debt they owe, so it’s in a creditor’s best interest to enable a person to lessen the payments and interest and collect some of the owed money rather than getting none of it. If you want your debt consolidated, you will have to get a professional who specializes in this field in order to get lower payments. Paying a pro can cost you money that you may not have, and more importantly, it may not even be practical because of how much debt you currently owe. It is better to do the calculations yourself and see if debt consolidation is a good choice because there is no point in paying someone to consolidate money you cannot repay. If it takes you 20 or more years to settle all your debt even after consolidation, you might be better off petitioning for bankruptcy.

Yes, bankruptcy seems awful on your credit history, but it is worth the effort because it will help eliminate your debt quicker than actually having to repay it. Remember, you can always speak with a local Thousand Oaks bankruptcy attorney or any other lawyer to get a free consultation and estimate of the costs for filing.