Bankruptcy Tips - Things Every Consumer Should Consider Before Filing for Bankruptcy

If you want to get out of debt and as quickly as possible, you might consider filing for bankruptcy. Bankruptcy is one of your quickest options to get out of debt, but it doesn't mean it is the best choice for you. Before making your decision, there are some things you need to know first.

• Your credit score will suffer. What is your main reason for wanting to get out of debt? Is it because you want to clean up your credit to buy a new home? If so, your mindset needs to be changed. Bankruptcy will get you a lower credit score for around seven years. Moreover, lenders will check your credit report and see that you avoided paying your debts in full. This decreases your chances of you getting that mortgage you were hoping for. If you are just looking to stop the collection calls and letters than bankruptcy might be okay.

• Bankruptcy isn't your only option. There are many ways to seek debt relief and not just short term relief, but long term relief too. See, bankruptcy will help eliminate your past due debts. What you need to consider though is your current bills. Do you have enough money to pay them or will you just start accumulating debt all over again? If so, you will be back at square one and you are limited in how often you can file for bankruptcy in a certain time frame. It might be best to go with credit counseling or debt consolidation, which focuses on not just getting out of debt now but also staying that way.

• Bankruptcy doesn't offer you full protection. There are some things you are exempt from losing in when you file for bankruptcy. As long as your home's equity is exempt and as long as you can continue to make your payments, you will not have your home automatically foreclosed on. Typically speaking though, bankruptcy does not cover child support, taxes, fines, and student loans. So basically you are able to ruin your credit to just get out from underneath all your credit card debt. For less damage, it might be within your best interest to examine settlement, a great debt relief procedure, instead.

In short, bankruptcy is a way to get out of debt but it isn't necessarily a debt relief process. Moreover, it is a serious decision that shouldn't be made on a whim. Most often, those who file for bankruptcy find it difficult to get financing for personal loans, homes, or cars for even years after filing. Before you decide to declare, it is important to examine the whole situation (pros and cons) and be sure to give your other debt relief options some serious thought too.

If you are over $10,000 in unsecured debt you really should consider getting a debt settlement. Creditors of unsecured debt are fearful of collecting and they also have stimulus money to make debt settlements financially feasible for them. Once the economy turns around it will be too late to eliminate your debt.

Check out the link below to locate legitimate debt relief companies in your area: