Bankruptcy is the ultimate weapon in your armory for debt relief.
You may think so but it may not be true entirely.
Bankruptcy is a legal procedure to help people in financial difficulties to discharge their debts.
However it comes with many riders.
So it is better to understand the deep secrets of bankruptcy before jumping on to the bandwagon.
First and foremost you need to be eligible for bankruptcy.
Your assets and source of income will dictate that.
You also need to have undergone regular credit counseling with government approved counselors before filing bankruptcy.
If you are under the impressions that you can have all your debts discharged by bankruptcy you need to take a closer look at facts.
There are many debts that can not be discharged by bankruptcy.
Take a closer look.
An official will be appointed by the court to discharge your debts.
Besides alimony and mortgages debts incurred by wrongful conduct can not be discharged by bankruptcy.
An example is debt incurred with no intent of paying it back or loans obtained by wrongful declarations.
If you want to keep your house or car you must continue to keep making mortgage payments.
So at the end of the day you may end up discharging very few of your debts.
And what are you going to loose? Your credit will be damaged for more that a decade.
It will be 8 to 10 years before you can get a loan at a decent rate of interest.
Consider the scenario of a debt settlement as debt relief.
It will be an out of court agreement with your creditors.
They will agree to waive a large part of the debt if you are prepared to pay the balance to them in a lump sum.
They gain by recovering 40 to 50 percent of the outstanding.
You need to arrange for the balance 50 to 60 percent.
By making this payment you can steer clear of debt.
It makes sense to use your savings or even go in for a consolidation loan to reach a settlement.
It will not scathe your credit.