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Is bankruptcy considered a form of debt relief?

On Behalf of | Jul 12, 2021 | Bankruptcy, Blog

Accumulating debt is ridiculously easy. Sign your name on a car loan, a few credit card slips or a student loan application, and debt quickly builds. When Texas consumers feel the heavy burden bearing down on them, debt relief is sometimes a necessity. Bankruptcy is even an alternative. It is a form of debt relief, but the question is whether the negative consequences outweigh the reward.

One size does not fit all

What is right for your neighbor may not be advantageous for you. This is of particular importance if you were thinking of estate planning. A bankruptcy could wipe out assets you want to pass on to loved ones. At the heart of debt relief is the effort to stop accumulating debt and get a handle on the current outstanding deficit.

Choosing a direction

Because debt relief is a concerted effort, you should choose a direction that you intend to stick to for the long haul. If you have a lot of secured debt such as car loans and mortgages, you might consider a consolidation loan with a better interest rate and overall lower payment.

For unsecured debts such as credit cards and personal loans, you might consider third-party debt management. While you lose the ability to use the accounts, you typically pay them off in about four to five years.

Is bankruptcy in your best interests?

Sometimes, there is not just a mountain of debt but also the loss of income. People frequently experience this in a divorce. When the end of a marriage leaves you with more bills than you can pay, a regular debt settlement might not be enough. It may be more advantageous to have a court discharge as many of these outstanding balances as possible to give you a fresh start.

If you are currently thinking about divorce, debt relief or bankruptcy, consider talking to an attorney about your options. None of these steps is one you should take without being fully informed.