Bankruptcy - an option?

Bankruptcy today is considered by experts as a last resort. Aegis generally recommends that you only think about bankruptcy once you have tried every other available method to repay your debt. These avenues include debt reduction settlements (which is what Aegis specializes in), debt consolidation loans or credit counseling programs.

Definition
Although its definition is practically irrelevant to today's credit environment, the American Bankruptcy Institute offers two definitions of bankruptcy:

1. To give creditors a fair share of the money that you can afford to pay back. (Chapter 13)
2. To give you, the debtor, a fresh start by discharging your debts. (Chapter 7)

Bankruptcy may in some cases be an appropriate option, but only after all avenues have been exhausted. These avenues include:

Contacting your creditors and negotiating repayment terms
Ceasing the use of credit cards and the withdrawal of cash from other loans
Contacting a credit counselor and working to stay on a debt management program

Once these options have been exhausted, you may want to consider bankruptcy. However, no matter which form of bankruptcy you seek, understand that there are more disadvantages than advantages to bankruptcy.

Bankruptcy Advantages

Pardons debt, or reduces debt for individuals in severe financial distress due to circumstances such as illness or loss of a job.
Can temporarily prohibit creditors from seeking foreclosure of a home or repossession of a car.
Can temporarily prevent wage garnishment, debt collector harassment, and disconnection of utilities.

Bankruptcy Disadvantages

Blemishes an individual credit record for 10 years or more, making car or home purchases difficult.
Necessitates higher interest rates - or secured credit cards - for people who are granted credit despite a bankruptcy record.
Does not discharge debts such as alimony and child support; most student loans; certain federal, state, and local taxes; debts from criminal activity; legal fines and penalties; luxury purchases made within 60 days of filing; and debts not listed on bankruptcy papers
Bankruptcy is a notice of public record that may be seen by potential employers, insurance companies, mortgage businesses, and other lenders
Is a social stigma that can cause feelings of guilt and embarrassment
Although it may fix short-term problems, bankruptcy can stay on your credit report for a full 10 years.

Before you consider bankruptcy, be sure to contact us for a free debt consultation. We are here to help.