Is Bankruptcy A Good Idea When You Have A Lot Of Credit Card Debt?

There are many myths associated with bankruptcy

, mostly because people do not understand bankruptcy law, how bankruptcy has changed over the past decade or what bankruptcy alternatives currently exist. One popular myth people seem to believe is that bankruptcy can make all their debts go away. This is simply is not true. Certain types of debt can be erased, but others cannot. Child support, alimony, student loans and any debts related to a civil lawsuit may not be eliminated by declaring bankruptcy.

Another unfortunate myth people buy into is that bankruptcy will improve the credit score of the person who files for bankruptcy. Filing for bankruptcy is by far the worst check you can have on your credit report. In fact, that negative hit will stay on your credit report for up to 10 years, and will affect your credit card interest rates, your mortgage, car loans and much more. This is why so many people are searching for bankruptcy alternatives such as debt settlement, debt consolidation or some other option; they do not want to deal with a decade of negative consequences. One last myth that far too many people buy into, or fools themselves into thinking, is that before declaring bankruptcy you can max out all your credit cards without having to pay them back. This is flat out untrue, and you could be found guilty of fraud if you try to attempt such an action. Before your bankruptcy is complete, your trustee will review your case and all of the purchases you made right before you filed for bankruptcy. Any experienced trustee will know to look for credit card fraud.

Bankruptcy has serious consequences, and most financial experts agree that it should be treated as a last resort. Bankruptcy alternatives are advertised on a regular basis and could provide the debt relief consumers are looking for without the decade long consequences associated with bankruptcy. Another important fact to remember is that The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 radically changed the bankruptcy law in America. Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two most common forms of bankruptcy amongst consumers, and they are quite different due to the 2005 rule changes. Any consumer who feels their debts are just too much to handle should look into as many bankruptcy alternatives as possible before bankruptcy is considered. You might learn that debt settlement is a much better alternative.

by: J Chase

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