|Is Bankruptcy Right for You?
Some experts recommend that if you cannot pay back outstanding consumer
debt in three to five years, bankruptcy may be the best option for you (of
course, that doesn't include long-term loans like mortgages, which are normally
repaid in 15-30 years). But bankruptcy isn't an "easy" out--depending
on which kind you file, it can make it difficult for you to obtain new credit
for up to 10 years, a consequence that must be weighed against the benefit
of relief from your debts.
Before you decide whether or not bankruptcy is right for you, you may want
to speak with a credit counselor about your situation and what other options
there might be. Just keep in mind that most credit counseling agencies are
funded by credit card issuers and other lenders, so their leaning is typically
away from bankruptcy, even if it may really be the best option for you.
For credit counseling, you may want to enlist the aid of a local branch
of the nonprofit National Foundation for Consumer Credit (NFCC). The NFCC
offers free or low-cost debt counseling, financial education, budgeting
assistance, and other financial services for consumers. To locate an office
nearby, you can check the NFCC web site at http://www.nfcc.org or call toll-free
1-800-388-2227 for 24-hour automated office listings.
The NFCC also offers Debt Management Plans that can sometimes lower your
payments, fines, or interest. A Debt Management Plan offers a systematic
way to pay down outstanding debt. You would deposit your debt repayment
funds with the agency each month and the NFCC would disperse the funds to
your creditors according to repayment plans it negotiated with them. The
NFCC can often negotiate reduced or waived finance charges and fewer collection
calls, so you might be able to bring your debt under control more quickly.