It doesn’t matter how responsible you’ve been with money. Life can take a sharp turn, and without warning, you might be unable to pay your home loan, auto loan and other bills.
Maybe you lost your job and had to accept employment with less pay. A divorce can also have a major impact on finances, and if you were injured in an auto accident or became ill, this can determine whether you’re able to work. In each situation, you may rely on credit cards to keep your head above water, and eventually, it may be difficult to keep up with minimum payments. Creditors don’t always make it easy for people who endure financial hardship, as they’re known for relentless collection calls and collection letters. With everything going on, you may decide that bankruptcy is the best route.
Yes, filing for bankruptcy can reorganize or wipe out your debts, thus getting creditors off your back and giving you a fresh start. But do-overs and second chances aren’t free. A bankruptcy will remain on your personal credit history for up to 10 years, and the process can knock as much as 250 points off your credit score.
Although bankruptcy can be the solution to your debt problems, it’s not the only solution. Here are three bankruptcy alternatives.