There are many options for dealing with debt – credit counseling, debt settlement, bankruptcy and more. While many debate the use of each tactic, it’s almost a universal belief that bankruptcy should be the consumer’s last resort when trying to resolve significant financial burden. Consumers have a variety of reasons for attempting to avoid bankruptcy, including a personal aversion to filing, a commitment to repaying what is owed, concern over the long-term damage to their credit score, and more.
While bankruptcy may be the only feasible option for some, consumers should consider the following when making this important financial decision:
- Credit Score: Bankruptcy has the most severe impact on your credit score when compared to other debt relief options. Many think that once a bankruptcy is filed, things will go “back to normal” in short order. The truth is, bankruptcy’s impact on your credit score can keep you from doing many things – like buying a home or vehicle, obtaining certain types of employment and more.
- Timing: It takes time to file bankruptcy, and then more than seven years for the mark to be removed from your credit history. Filing for bankruptcy truly is a commitment – you’ll endure the consequences (both positive and negative) for many years to come.
- Cost: When filing bankruptcy, you must pay attorney and court fees, which add up quickly. When already struggling to make ends meet, the idea of adding in an additional expense can be just too much to bear.
Still not sure if bankruptcy is the right option for you? Check out this article on the different types of debt relief to help make your decision. If you have questions, contact the experts in each industry – credit counseling, debt settlement or bankruptcy—a trusted industry accreditation organization can provide advice specific to your financial situation.
