Many people hear the term bankruptcy and automatically think of financial ruin. However, filing for bankruptcy won’t necessarily cripple your financial future, but rather serves to help eliminate many of your current financial obligations. Are you not sure filing for bankruptcy is the right decision? Find out why bankruptcy is more beneficial than turning to a debt management solution with this informative article.
Eliminates a Number of Debts
The problem with many debt management solutions is that they do not eliminate the debts themselves, but rather force you to make changes to your spending and budgeting habits—something that may prove extremely ineffective if your spending habits were what got you into trouble in the first place. Credit counseling, for example, provides individuals with tips and tools to help get their finances back on track but does not actually result in the discharge of any debts.
You must meet certain criteria in order to file for bankruptcy, including completing a financial management course, filing a petition to the federal bankruptcy court, having insufficient income to pay off debts, and having adequate non-exempt assets. Someone interested in credit card debt consolidation, however, must go through a number of hassles. You will need to have an extremely good credit score in order to qualify for debt consolidation, and your large debt loans will require collateral. In addition, there are a number of debt management scams currently being promoted across the country, increasing the risk of providing valuable credit information to individuals who are not actually interested in providing financial security.