Many often see bankruptcy as a personal failure and taboo due to the wrong belief that only irresponsible individuals file for bankruptcy. However, this is far from the truth. Life can throw curveballs at anyone, and bankruptcy can be the only option for a fresh start.
While filing for bankruptcy provides a second chance, there are factors and reasons why people will wait to file for one. Reasons such as adverse credit impact, loss of assets due to liquidation, and employment problems in the future are some of the grounds why filing for bankruptcy is not a first option.
Whether you plan to file for bankruptcy or are looking for options to settle your debt, the first thing to do to lessen the burden of your situation is to consult a bankruptcy lawyer in Baltimore to review your choices.
What Are Debt Relief Options?
Debt relief options is a catch-all term describing strategies and programs designed to help individuals and businesses struggling to pay their debts. Not all debt relief options apply to everyone’s situation. Some may be a better or worse fit for your situation.
Debt Consolidation
Debt consolidation combines multiple debts into a single loan, typically with a lower interest rate and a more manageable payment schedule. There are two ways to do this:
- Take out a personal loan that covers the total amount of the debts that are being consolidated and use the loan proceeds to pay off the debt, leaving only the loan to repay.
- Transfer the balances of high-interest credit cards to a single card with a lower interest rate, often with a balance transfer fee.
Although this could be a great option, there are terms and conditions of the loan or the credit card you must consider carefully. There could be hidden fees and higher interest rates. Also, this may not be for your situation; consider better debt relief options.
Debt Settlement
However, debt settlement may have drawbacks, such as hidden fees with the debt settlement company, a negative impact on credit scores, lawsuits by creditors, and tax consequences on foreign debt.
Credit Counseling
Credit counseling is designed to help individuals and businesses struggling with debt through debt management plans, debt assistance, financial education, and debt report reviews. It also involves negotiating with creditors to reduce interest or monthly payments, consolidating debts into a single charge, and creating a budget for effective debt repayment. Credit counseling also helps debtors address the emotional stress associated with debt.
Credit counseling is valuable for improving financial situations and effectively managing debt.
Bankruptcy
Filing for bankruptcy is your last resort after exhausting all debt relief options because it provides legal protection from creditors and a structured process for resolving debts.
Bankruptcy provides many advantages, even if you do not wish to be in the situation. It provides legal protection from creditors who may threaten you, a chance to restructure your debt, protection of assets, and a fresh start.
Ending up in financial turmoil is never foreseen. Getting up from the unfortunate event with smarter choices will be your only way out. Ensure your financial decisions are guided by consulting Richard Hackerman, a trusted Baltimore bankruptcy lawyer. Reach out to us at 410-243-8800 or 888-243-5500.
