This Is Why Bankruptcy May Not Be Your Best Option
The stress that comes with being buried in debt can be overwhelming, and many people facing high credit card balances, possible foreclosure and repossession of other assets believe that bankruptcy is their only option to repair their credit problems. In many cases, this is simply not true.
Unsecured debts such as credit card balances are typically dischargeable in bankruptcy, but some debts are not. Student loans, child support and some tax debt will not be wiped when you file bankruptcy. If you are facing financial difficulties, seeking the counsel of local bankruptcy attorneys who are knowledgeable about bankruptcy laws in PA can give you a clearer understanding of your options for reducing or eliminating your debt.
When Bankruptcy May Not Be For You
Your debt is high, but not overwhelming. There are a few ways to bring down your debt without filing bankruptcy. If you own an expensive home or vehicle, selling them and buying a house or car that is more affordable can be a viable option to reduce your debt. It can improve or keep your credit intact and allow you to finance a new car at a reasonable interest rate. Although filing bankruptcy may wipe out your unsecured debt, if the majority of your debt is secured debt like car loans, it is possible that you will lose what you have paid into the loan and the car itself. When you go to buy a new car with a recent bankruptcy in your credit history, you will have to pay significantly higher interest rates.
If you have a decent amount of equity in your home, selling your home or refinancing your mortgage could also help you pay off unsecured debt such credit card balances as well.
You qualify for a debt consolidation loan with a lower interest rate. With a debt consolidation loan, all of your outstanding unsecured credit accounts are consolidated into a new loan with one monthly payment. Before you apply for a consolidation loan, it is vital to consult with an attorney at a bankruptcy law firm who can help you determine which option will most effectively help you clear up your debt.
It’s also important to note that if you own a home you may be required to use it as collateral for a debt consolidation loan. If this is the case, filing bankruptcy may be a better option. Chapter 13 Bankruptcy is similar to a debt consolidation loan in that it works as a repayment plan that consolidates all of your debt into one monthly payment. Although filing bankruptcy may affect your credit for a period of time, you won’t have to worry about being taken for a ride by a disreputable company or paying a lot more interest to get yourself out of debt.
If you are unsure about whether bankruptcy is right for you, our experienced West Chester bankruptcy Lawyers at Carosella & Associates can help you get your finances back on track.