Bankruptcy: knowing when to walk away

When faced with large amounts of debt, many consumers first think about filing bankruptcy. But while bankruptcy may be the best option for some, it is not the only option.

Consumers with only one or two accounts in default should consider dealing with those accounts, especially if they have been sold. It may be possible to settle or eliminate the debt and keep it off credit reports.

Bankruptcy, on the other hand, is the “nuclear option” best used to eliminate insurmountable mountains of debt. It gives consumers a clean slate, although it damages credit, which can make getting loans more expensive.

If you are considering bankruptcy, first talk to a consumer lawyer with experience handling debt collection lawsuits. They can help you decide whether it makes sense to fight or file bankruptcy.

(photo: ESwift)