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Does it make sense to file for bankruptcy?

On Behalf of | Jun 23, 2021 | Bankruptcy |

More and more Kentucky consumers have determined that filing for bankruptcy could be the way out of debt that’s spiraling out of control. Many have tried negotiating with creditors or consolidating debts.

Some debts are more difficult to get rid of than others

The promise of a fresh start is attractive. You get rid of the debt, and the phone stops ringing. There’ll be no more letters from collection agencies. Granted, your credit rating takes a hit, but it’s not looking so good right now anyway.

However, remember that bankruptcy may not be the panacea you hope it is. Depending on the types of debts you have, it may not be worth the seven to ten years of adverse impact on your credit report. For example, child support, student loans and tax obligations remain in place. On the other hand, if the majority of your debt involves unsecured obligations such as credit cards, bankruptcy may be one way to get out of the financial hole.

Understanding what to do with the debt your cannot get rid of

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If your debts fall under the category of things that won’t go away after bankruptcy, you might need to consider different steps. For example, you may be able to work with the student loan holder to consolidate several loans into one payment that is lower than the sum of the individual bills you pay.

When you have largely secured debts, you may be able to refinance the obligations. While you might add to the length of the debt, you could reduce the monthly payment due, which could help you out of the predicament you’re in right now. If you’re not sure what to do, consider spending time with an attorney who could help you weigh your options.

 

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