Because Chapter 7 bankruptcy has serious and lasting effects on your credit and your financial future, it is important to consider all of your options prior to deciding to file Chapter 7 bankruptcy.
1. One option to consider is consumer credit counseling.
There are many non-profit services that aid consumers in analyzing their debt situation and making a determination whether any kind of debt consolidation or debt payment plan would benefit you more than filing a Chapter 7 bankruptcy.
2. Consider requesting payment plans from your creditors
Before jumping into a Chapter 7 bankruptcy, you should consider contacting your creditors personally. Often by making contact with the creditor and emphasizing a willingness to pay on the debts you have incurred, is enough to show the creditor that you have intentions of settling the debt and not trying to escape payment through filing a Chapter 7 bankruptcy.
Creditors appreciate the contact from you and will sometimes try to work out a settlement of the debt.
They would certainly rather see a payment on the principal and forgive some of the interest, rather than see the entire debt be washed away by a Chapter 7 bankruptcy.
3. If you have covered sought credit counseling or have not been able to work out an amicable agreement with your creditors, you may want to at least consult a local attorney prior to deciding to file a Chapter 13 bankruptcy.
You can locate many local bankruptcy attorneys through your yellow pages or internet searches. Often they will offer a free initial consultation.
You can take advantage of that consultation to seek advice on whether filing a Chapter 7 bankruptcy is the right course of action in your financial situation.
Someone experienced with Chapter 7 bankruptcy filings will be able to tell you whether filing would benefit your situation or in some cases could worsen it.
Ultimately, it is best to seek advice from any reliable source prior to deciding on filing a Chapter 7 bankruptcy.
4. Advantages of Debt Consolidation
Ultimately, there are several advantages to debt consolidation. By choosing to consolidate your debt, you can combine all your debts into one payment instead of many.
This payment is lower than you are paying now, sometimes as much as 50% lower. Debt consolidation generally brings all your past due accounts to current status.
Another advantage of debt consolidation is that it eliminates all those late fees and over-limit charges you have been incurring.
By combining all your debts into one payment, you often get a lower interest rate overall than the several different higher ones you probably have on some of your accounts.
All of these things taken together mean that you will be able to pay off your debt much quicker and for less money.
5. Why Is Debt Consolidation A Good Thing To Do?
Debt consolidation is a good alternative to your other options, which include bankruptcy and continuing harassment from creditors and the eventual legal charges that you will have from not paying off your debt because you are unable to. By doing debt consolidation, you are taking action in a situation that will soon be beyond your control.
Creditors are likely to be much more willing to work with you if you do some type of debt consolidation. You also get the peace of mind that comes with being able to pay your bills on time.
You will not get any more harassing calls, and you will eventually be out of debt. So if you are wondering if you should consolidate your debt, the answer is probably yes.
Debt consolidation is perfect for someone who is unable to pay their bills and the amount of debt is more than the amount of income that a person brings home each month.
6. Are There Other Debt Consolidation Options?
There are other options that often make more sense, including taking out a home equity loan or second mortgage or working with a credit counseling service to pay off your debt at lower monthly payments.
The easy solution of charge card debt consolidation may look good to you, but you need to think it through before you decide to do it.
It can leave you deeper in debt than you were before unless you can restrain yourself from succumbing to the lure of easy money that credit cards offer.
Debt consolidation is the first step to financial freedom. Financial freedom is more than having extra money in the bank. Financial freedom is being free and clear from debt.