The damage filing for bankruptcy does to your credit report could make recovering from financial difficulty more time consuming and costly. It should always be considered a last resort when it comes to handling your
debt. Not only does it reflect on your credit history for up to 10 years, but it could hinder you from future job opportunities as employers check your credit history before hiring you.
Debt management programmes such as
debt counseling and
debt consolidation may enable you to recover from being over-indebted without the blemish on your credit history. While both of these are reflected on your credit report for up to 7 years, it shows creditors that you’re serious about paying off your debt. Consolidation will how your debt as having been settled and inform future lenders that you were able to repay your obligations to your creditors.
Debt consolidation and debt counseling programmes are a simple process of seeking advice by applying for services. These services are paid for. Bankruptcy on the other hand is a complicated and lengthy process requiring you to disclose every asset you own, your income and your expenses. If you own more than you are allowed to, according to your country’s exemption laws, you will have to surrender these assets which the courts will liquidate and distribute to your creditors. You will also have to appear before a court-appointed trustee who is hired to oversee the bankruptcy.
Debt consolidation allows you to settle all your debt and repay one creditor at a lower interest rate. Debt counseling will enable you to negotiate easier payment terms with your creditor. Whichever debt relief system you decide on, will be determined by your unique set of circumstances.