Want A Sensible Alternative to Bankruptcy?
by Ellise Walsh

If you want a sensible alternative to bankruptcy but are unsure where to turn, you may be an excellent candidate for Credit Counseling. As rates of consumer debt have grown over the past decade, debt counseling services have grown along with it. The best debt relief services can help consumers to dig themselves out of the hole they find themselves in.

It is not hard to understand why there is such an epidemic of consumer debt today. In many industries wages have not kept pace with inflation, and many consumers find themselves running in place just to keep up with living expenses.

Putting money aside under these circumstances is very difficult, and this helps explain the extremely low savings rate we see today. While most financial experts recommend keeping an emergency fund equal to at least three to six months of wages, only a very small percentage of workers actually have such a fund. The lack of an emergency fund means that a job loss or large unexpected expense can quickly spiral out of control and leave a consumer with more debt than they can handle.

When consumers see their debt spiraling out of control like this, the first thing they may think about is declaring bankruptcy. However, declaring bankruptcy should be a last resort instead of a first thought. Always remember that any bankruptcy will stay on your credit record for at least seven years, and it will be very difficult to get credit in this time period. Since credit is so important in today’s world, this may affect your life more than you think. Many states allow car insurance companies and employers to access your credit record, so a black mark on your credit report could potentially lose you a job or an insurance policy.

Luckily, there are sensible alternatives to declaring bankruptcy. One of the simplest things you can do on your own is to call your credit card company and try to renegotiate terms with them. You may be surprised at how willing your bank is to renegotiate the terms of your debt. The credit card company may be willing to settle for 70 or 80 cents on the dollar, to lower your interest rate or both. Credit card companies are not doing this to be nice; they are looking after their own best interests. If you declare bankruptcy, they may have to settle for little or nothing on what you owe. They are willing to renegotiate so that they can get at least part of what they are owed.

If you are unable to negotiate with your creditors directly, a debt consolidation or credit counseling service can be a big help. These specialized consumer credit counseling services are skilled at negotiating with banks and credit card companies, and they may be able to achieve results you are unable to get on your own.

If you do retain the services of a consumer credit counselor, be sure to take full advantage of the counseling services they offer. It is not enough to eliminate your current debt. It is just as vital that you learn how to avoid debt in the future and manage your finances effectively.

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