Bankruptcy, Credit Card Debt NEWS

Personal bankruptcy for credit card debt

Published by admin on January 30, 2010

If you have a lot of credit card debts, you may have considered personal bankruptcy as a solution for your problems. However, it’s a decision that has long-lasting and far-reaching effects and it’s important to think about what other options you have being commiting to this path.
Personal bankruptcy is a last resort debt management option, when there are no other alternatives and this remains your only choice.

First of all, you need to know what are the exact effects of personal bankruptcy: it’s going to stay in your credit report for the next 10 years, and this means that it’s going to be rather difficult to get a credit, buy a house, get life insurance and it might even be more complicated to get a job, as some employers check the credit report of prospective employees.

However, you’re going to get a discharge, which is a court order which says that some of your debts no longer have to be repayed and it will stop the activities of debt collection agencies. You need to remember that not all debts are erased by personal bankrupcy: while unsecured debts (including credit card debt) are going to be canceled, there are a number of debts which will not be canceled: among these are the child support and alimony, any kind of fines and taxes you owe to the authorities and student loans.

Your whole wealth (with some exceptions, such as personal items) is going to be liquidated and used for the partial repayment of creditors. If you have a house for which your creditor has a an unpaid mortgage attached to it, you are no going to keep it, unless you make a plan with the creditor to catch up on your debt.

Alternatives to personal bankruptcy which might want to consider include debt consolidation and debt settlement.
When you get a debt consolidation loan, you are going to get a new loan to pay the rest of the loans you currently have. If the current monthly payment for your loan is too big for your incomes, you can get a loan that is on a longer term, so that you’d get a smaller monthly payment.

Debt settlement is a solution when you are on the brink of bankruptcy: the creditors prefer to negociate wih you: instead of you declaring bankruptcy, they’d rather talk with you on a repayment plan and possibly the reduction of the amount of outstanding debt if you pay them now.

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