Bankruptcy: How to Avoid It

If you find yourself facing the prospect of filing bankruptcy then obviously you're having some serious financial issues. Oftentimes, though, many consumers don't realize that there are other options besides filing for bankruptcy. Even though you may be overwhelmed by bills and harassing calls and letters from creditors, bankruptcy is extreme, and often unnecessary.

One thing that you can consider instead of filing bankruptcy is credit counseling. Credit counselors are specially-trained financial consultants who can create a budget for you, based on your monthly income and financial obligations. They can assist you in determining which repayment plan is best for you and your individualized situation.

If you decide not to consult a credit counselor and feel that you can climb out of the hole that your debt has created on your own then there are some things that you should know. First of all, don't let creditors bully you into making payment arrangements that you can't realistically pay on a regular basis. This will only cause you to again become delinquent, forcing the creditor to possibly take legal action.

If you are served with court papers by a creditor who wishes to sue you, don't ignore them. By ignoring the court date, you are communicating that you don't care how the judge rules and your creditor will automatically receive everything that they ask for and more. Attend the court hearing and plead your case. You might be surprised by what wonders a judge can work. He or she might actually rule in your favor, provided you have a good excuse for not paying your debt.

Bankruptcy isn't something that should be taken lightly, and you should never file unless you're absolutely positive that it's your last alternative. A bankruptcy will remain on your credit report for up to ten years, which could adversely affect your ability to receive the best rates on credit cards, mortgage loans, and car loans. It could also prevent you from being hired for certain jobs in which your credit rating is checked. This is why it is imperative that you exhaust all of your options before making such a final, life-changing decision.

If you've exhausted all of your options and bankruptcy is the only remaining option then don't beat yourself up over it. Filing bankruptcy doesn't make you a failure, although you may feel like one. Try to think positively about the situation and realize that it is the beginning of a whole new financial future for you. The sky is the limit, and it's only what you make it. If you want to rebuild your credit and achieve a perfect credit status, it is possible after a bankruptcy, with a lot of hard work and discipline.