The first thing you must understand about bankruptcy is that it should only be used as a last resort, and that it is usually only recommended for those whose financial problems are so severe that they do not qualify for any other debt relief option. If you have a relatively small amount of debt, you should not even contemplate this option, as there are far superior alternatives.
One such alternative would be debt consolidation. This allows you to convert unsecured debt into secured debt and, as a result, pay less interest, thereby reducing your debt. It entails obtaining a loan to pay off all of your debts in a single transaction, after which you can enjoy the lower, more flexible monthly payments of a standard loan, which you can pay off significantly quicker.
If you discover, however, that your debt is greater than what consolidation would allow, you could pursue debt settlement. This method essentially halves your debt and reduces its interest rate, allowing you to pay it off much quicker, typically within two years. You will need a reputable debt negotiation firm, ideally one that can also provide the legal support you will require during the negotiation process. With a reputable company, you can anticipate a reduction in your annual fees, payment penalties, and interest rate. After all, the creditor needs at least a portion of his money back to continue operating.
As you can see, bankruptcy is not your only option when facing financial difficulties; in fact, it should be your last resort, as it can remain on your credit report for more than ten years and make it extremely difficult to obtain loans in the future.
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