Bankruptcy - Is It Really An Option?
Many people who’ve been backed into a corner because of debt rush into bankruptcy. Although the debt relief provided by bankruptcy is immediate, bankruptcy should be thought of only as a final resort because of the ongoing implications it has for the rest of your life. Most people who file for bankruptcy don’t consider this aspect until they’re confronted with the ever-present question on loan, employment, educational and/or licensing applications: “Have you ever filed for bankruptcy?” Because bankruptcy remains an option that can be invoked at any time in the debt relief cycle, it’s almost always wise to search for an alternative first. At DRO, we believe our Debt Reduction plan is a bankruptcy alternative. Debt Reduction is often referred to as, Debt Negotiation or Debt Elimination.
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are the two most prevalent kinds of bankruptcy. Here’s how the bankruptcy option stacks up against the DRO alternative:
- Bankruptcy may immediately wipe out your debt, but this depends on what type of bankruptcy for which you are eligible (Chapter 13 Bankruptcy or Chapter 7 Bankruptcy). Another kind of bankruptcy will allow you to pay off part of your outstanding debt over a period of three to five years.
- Expect difficulty in obtaining new credit, which may only be available to you at extremely high interest rates.
- In some circumstances, you may loose your home, car and other financial assets.
- Bankruptcy so severely impacts your credit, borrowing money will be extremely difficult, or even impossible, for as long as ten years.
- Bankruptcy and its consequences may stay with you for as long as you live.
- For the most part, credit blemishes are counterbalanced by the fact that your outstanding debt is reduced to zero by the time the program concludes.
- Once you complete the program, you’ll find that you can usually obtain credit at several different rates. These rates improve over time and with a history of making payments on time.
- DRO does not require the use of equity in your home, car or other financial assets.
- DRO’s program offers professional debt help with the goal of a debt-free outcome that allows you to start over in just two to three years.
Remember, bankruptcy is in most cases a least-desirable alternative that will be a serious financial burden for many years. It should be considered unavoidable only if an individual earns too little to make even partial payments on their debt or has no income at all.
Here are some alternative debt relief options that you should review before you consider bankruptcy: Debt Management, Debt Negotiation, Credit Card Debt, Consumer Credit Counseling and Debt Consolidation Program .
