Is Personal Bankruptcy Right for me?

Personal bankruptcy is a problem that affects so many consumers in today's modern world. So why does it affect so many people? Well it's simply because consumer debt is now at the highest level that it has ever been at in the USA economy.

Most consumers largest debts are for things like home loans and automobile loans. These are secured debts as they are secured against the asset that you are purchasing. The most common second highest type of debt is unsecured debt, this is mostly from the use of credit cards. Credit cards are the widest source of unsecured debt in the USA and the world.

Unsecured debt can make people think about what their options are, it can be a catalyst in the reaction so to say. It is thought that many credit card companies have developed a 'honey trap' where once consumers get hooked, it is very difficult to get out of the continual borrowing cycle.

The most successful part of this strategy is allowing the customer to make a minimum payment, they even advertise this on the statements. Whenever the consumer pays this minimum amount all they are really doing is paying for the interest, a very small percentage goes towards covering the original loan. This means that by using the minimum payment you are getting yourself stuck in a continual cycle of just paying off the interest each month.

When the consumer just starts paying the minimum payment option they are making debt insolvency a real possibility. As the debt from credit cards increases, life continues as normal. Life can lead to unexpected outcomes, it could be a loss of employment, or illness. Anything could change making it impossible for you to repay your loan. Life is uncertain, but debt must be paid back. This is not secured, so you personally promise to give this debt back.

If something unexpected changes in your life it can make it impossible to keep up the payments on your unsecured debt, this could lead the debtor to consider filing for personal bankruptcy.

You can also find more info on Avoid Bankruptcy and Bankruptcy Alternative. Filingpersonalbankruptcyhelp.com is a comprehensive resource to get help in Bankruptcy.

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Alternatives To Bankruptcy

Bankruptcy is one of the least envied predicaments one can be in financially. For those close to or at financial ruin, bankruptcy can seem like the best option. While bankruptcy can give a person a fresh start and a reprieve to lots of stress of not being able to pay their debt, bankruptcy is not a choice for everyone. If you are thinking about going bankrupt, you should seriously consider the alternatives before you decide.

Don’t Default
Many people that are on the verge of bankruptcy have relatively little debt that a few years of belt tightening can repair. For instance, if you are out of work and have debt in the $20K to $50K range, you might want to wait it out. Many people usually bounce back and are able to pay off their outstanding debt in relatively short periods of time. You should never go bankrupt for a situation that has a reasonable chance of repair. You never know, a month down the road you may find a decent job or once again become able to return to work.

Talk to Your Creditors
If you have become ill, injured or unemployed talk to your creditors and ask for a forbearance for a few months. Many creditors will bite the bullet and allow you a few months to help you get back on your feet. Most people, given a few months off from their loans are able to bounce back and repay their loans without anymore disruptions.

Pay the Absolute Minimum
Defaulting (not paying) is one of the reasons many people go bankrupt. However, if you can, choose to pay the absolute minimum. Send whatever you can. This means if you owe $200 a month on a credit card bill, send the company $10, or anything just to show them that you are still willing to repay the loan, but are in a difficult situation for the moment. This tiny payment can help you keep creditors at bay and willing to work with you.

Besides these options above, it is always best to talk to a bankruptcy attorney or non profit organization that can help you personally with your specific situation. Most people have financial difficulties at least once in their lifetime and if you put lots of thought and effort into these problems, many times you can climb out of the debt hole and return to good financial standing.

Connie Barker is the owner of several financial websites including http://www.badcreditloandirect.com

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