To avoid bankruptcy, consolidating your debt may be your best alternative

Bankruptcy is listed among the top five negative, life changing experiences a person can go through. The other four are divorce, disability, severe illness and loss of a loved one. People often think bankruptcy is a way to start over with a "clean slate," but they soon find out that they are mistaken. Bankruptcy is an experience that stays with you for life and should be avoided if possible.

Free consultation - Start now >>

On rare occasions, bankruptcy is the only way out. A "chapter 7" is total bankruptcy and stays on your credit reports for 10 years. "Chapter 13" is really a type of payment plan and stays on your credit for 7 years. However, even after coming off your credit report, the fact that you filed for bankruptcy at some point may haunt you the rest of your life. Loan applications as well as some job applications sometimes ask if you have "ever" filed for bankruptcy. If you lie because the bankruptcy was so long in the past, you are still committing fraud and could later lose that job.

When you file for bankruptcy under the new law, you no longer get to choose the type of bankruptcy that seems right for you. Instead the court decides what you qualify for. If the court decides that you have a high enough income, you have to pay back most of your debt anyway. Also, you are now required to go through debt and budget counseling. Instead of putting yourself through that for bankruptcy, why not engage qualified counselors to help you get out of debt without going bankrupt.

The alternative to bankruptcy is debt consolidation, a program which actually works to eliminate your debt and restore your credit rating without bankruptcy. Depending on your level of indebtedness, you could be free from debt in 12 to 30 months. And even though it is nothing to be ashamed of, you'll never have to report your debt consolidation program on a loan or job application.

In addition to haunting you forever, many types of loans cannot be eliminated with bankruptcy. These include child support payments, unpaid alimony, and defaulted students loans. Many secured debts, likewise, cannot be eliminated with bankruptcy. Why go to all the trouble and still have to pay off much of your debt anyway. Instead, take charge of your own decisions, take responsibility for your mistakes, and give yourself a chance to solve your debt problems in a positive way.