Often, people struggling with their finances will go long past the point of no return. They will wait to address their money problems that they are having until they have very few options available. In many of these cases, it can take a long time for them to resolve the issues they are having, meaning that the financial strain will continue.
Many people are scared when they hear the word bankruptcy, and do not want to consider it as an option unless it is a last resort. However, not every person having money problems is in the same situation. It will be very important to consider what is most important to you while you look at the potential solutions that may be available.
Some individuals may wish to consider a payment plan to reduce their debt. They may work with their creditors to lower their monthly obligations, or negotiate some of the debt away. This can be challenging, as some creditors may be unwilling to work with debtors.
Additionally, there are many scam agencies out there that promise to help debtors reduce their debt. Frequently, these companies take a debtor's money and leave them with worse financial problems. Creditors may garnish wages or harass the debtor for the money that is owed.
Others may have property that could make filing for bankruptcy protection the best possible option. For example, if a person owns a home, he or she may want to remain in the home. Chapter 13 Bankruptcy may make it possible for an individual to keep the house, and pay off debts in a monthly payment plan.
What many people do not realize is that once a bankruptcy is filed, an automatic stay goes into effect. This means that creditors cannot sue you or harass you for unpaid debts. This can allow you to understand your repayment abilities, and can help you toward re-establishing your finances.
Source: Fox Business "Decision Points: Bankruptcy vs. Debt Payment Plan" June 27, 2012.