Debt has crippled the millions of lives in America. When you are in debt, it becomes harder to save for the future, start a family or buy a house. If you are in debt, how do you know if bankruptcy is the right option for you?
You Choose Between Paying the Bills and Paying for Groceries
If you suffer from extreme financial hardship due to your debt, a bankruptcy judge may grant you Chapter 7 status. This allows you to completely discharge your debt in a matter of weeks as opposed to spending months in court to merely reorganize your debt.
You Cannot Consolidate Your Debt
Debt consolidation is almost always a better option than bankruptcy. However, if you cannot consolidate because you have already taken out a home equity loan, transferred your credit card balances to a single card or do not qualify for a home equity loan or line of credit, you may need to file for bankruptcy.
Your Credit Score Will Improve With Bankruptcy
It is possible that your credit score could improve when you file for bankruptcy. According to the financial professionals of McLay, a firm that helps people filing for bankruptcy in Ontario, it might be better to settle your accounts in court. Those who have accounts in collection or balances charged off by creditors, merely having those accounts settled in court could improve your credit. Bankruptcy may also be an acceptable option if you don’t need to use your credit in the next year or two to get a loan or rent an apartment.
Debt Related Stress Costs You More Than the Debt Itself
It is common for people under a lot of stress to develop health issues that could require medical care. If you are hospitalized or require additional medication to control your stress, it could cost you more than the original debt itself. Therefore, getting rid of the debt that is causing your health issues could be in your best interest.
A Debt Settlement Cannot Be Reached
Most creditors will allow for a debt settlement if you are struggling to pay your bills. However, if your creditor does not want to settle the debt for less than what you owe, there is nothing that you can do about it other than file for bankruptcy.
Bankruptcy should always be your last resort. If you can pay your bills, negotiate a lower payment with your creditors or find another way to keep up with your debt, you should do so. If you do decide to file for bankruptcy, understand that it could be years before your credit score is back at a reasonable number.