You have had some tough times, whether in your business or your personal life, and you may be considering filing for bankruptcy. While the option of bankruptcy may be your only option, you need to be aware that it is not your ONLY option, and in reality, bankruptcy should only be used as your last resort.
Why? For many reasons, and one of the foremost reasons is that bankruptcy will continue to haunt you for 7 to 10 years on your credit report. When bankruptcy is seen on a credit report for someone applying for credit, this is a huge red flag to them and many thoughts start to go through their minds. Is this person not responsible with credit? Does this person not understand that credit is really "renting money" and cannot be considered "free money"? Is this person trying to lead a champagne lifestyle on a beer budget?
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The reality is that nobody goes into debt thinking that bankruptcy will cure all their problems if they get in over their head. That is not the case at all, and the act of filing bankruptcy will mark you as a "leper" for many years, which is why all viable options and alternatives should be thoroughly investigated before you file bankruptcy.
There are many options to bankruptcy that many people do not consider, or they do not think of them until they are too far down the bankruptcy path to change direction. Even if you are laden with debt, it is still possible to get a debt consolidation loan from many lending institutions. A debt consolidation loan can pay off your outstanding debts and give you some much needed breathing room while you get your act back together.
On the positive side of a debt consolidation loan, you will have avoided filing for bankruptcy and all the credit report negatives that go with that. But on the downside, you need to be aware that you will still need to pay your outstanding debts, which after a debt consolidation loan, may only be one large payment. The downside here is that since you are so far in debt, the debt consolidation loan will very likely be at a much higher interest rate than you could have gotten if you had excellent credit. Granted, the overall amount of interest you are paying each month is almost certainly less, but it is still not an overly attractive interest rate.
The biggest downside to a debt consolidation loan is that you may then consider yourself to be free of all that debt. Nothing could be further from the truth. You still have that debt. The strong temptation will be, since now your credit cards have a zero balance, to charge them to the hilt again, which will only get you back to the same place you are now, except that you will also have responsibility for paying the debt consolidation loan.
Make sure you have a PLAN for how you are going to manage your finances, even if you do need to file bankruptcy. If your debt obligations exceed your monthly revenues, then you are going to have a problem, and no amount of book-juggling can change that fact. Most people think that more income is the answer, but more often than not, the reality is that less expense is a much better long term option, since you are probably making payments on things that are not absolutely critical to the revenue-producing part of what you do.
You need to talk with a qualified bankruptcy lawyer who is familiar with the bankruptcy laws in your state. You can get a free evaluation from a bankruptcy attorney who is local to you to discuss your situation and determine your best course of action. Bankruptcy may be an option, but it is certainly not your best or only option most of the time.
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