Many people assume that bankruptcy is the end of the road for any individual. It will be the symbol of ultimate financial failure for most people and some get too depressed about it to even think about bouncing back. What you need to understand about bankruptcy is that it takes care of your debt on the date of the bankruptcy order itself. There is no such thing as absolute financial failure unless you simply give up on rebuilding your life all over again. After your initial debts are settled and you are discharged from your first bankruptcy, you can always bounce back and rebuild your life and finance again. Of course, this means that you will need to manage your finances with even more scrutiny and discipline. But if you find yourself slipping into a pool of debt again, you probably do not want to file for bankruptcy again as the consequences will be even more severe the second time. There are other forms of debt help that are designed to assist individuals with a history of bankruptcy.

The first step towards reducing your debt starts with you. You need to give yourself the debt help that you desperately need. After all, the reason you needed to file for your first bankruptcy was because you owed a significant amount of debt that you have no possible way of clearing. So you need to take all the necessary steps and precautions not to land yourself in the same trouble again. Be very serious about avoiding new debts. When you’ve filed for bankruptcy, you are required by law to disclose the fact when you are acquiring new loans or buying assets. Of course the most effective way to not acquire new debts is by using only cash. But sometimes that is not a feasible option especially if you are going to buy a home. So its best to set your priorities straight, sort out your payment schedules and limit the use of credit card. It could be best to stop spending more than you earn and start living within your means.

If you find yourself in serious debt again, do whatever you can to avoid having to file for a second bankruptcy. You need to get some bankruptcy debt help to find out ways not to just get out of bankruptcy but to avoid having to go through all that mess all over again. You can check out various other ways to try to settle your debts such as hiring a Consumer Credit Counseling Service (CCCS) or appointing a third party professional to negotiate your debts for you. There are similarities and also differences between the CCCS and debt negotiation; both of which aim towards the same goal and that is to get you out of your financial trouble before it gets too late.

The CCCS has been around since the 1960s and offers programs such as the Debt Management Plan (DMP) that works with creditors or lenders to allow a reduction of your interest rate. When you enroll in credit counseling program with the CCCS you can rest assured that your enrolment will not have any direct impact on your credit scores as opposed to going for debt settlements or bankruptcy. You also do not have to worry so much about receiving calls from your creditors and enjoy the benefits of lower interest rates and monthly payments. However, if you debt balance is high, your creditors might be hesitant to extend your loan term and you might have to opt for debt settlement instead. You also must understand that the lower interest rates are not customized to suit your own individual case but rather as a result of an understanding between your creditors and the CCCS. So sometimes, in dire situations, you might not even be able to make monthly payments based on their lowest interest rates.

Another option is for you to go for debt settlement. Granted, it is riskier due to the fact that your creditors will only be reducing your principal amount but not your interest rate, but in the long run you will probably end up saving more. The bright side of debt settlement is that your debt could be reduced by up to 50% of the principal amount. If the thought of negotiating with creditors gives you goose bumps and makes you run in the opposite direction, there are always debt settlement companies that will negotiate with your creditors for you. Debt settlement also takes less time to settle so if you work seriously towards it, you will be debt free in just a few years. The drawback of debt settlement is that it will affect your credit scores and there is a big possibility for you to be harassed by creditors until you actually make the outstanding payment.

Other than the two types of debt help discussed above, there are many other debt relief companies that offer alternative ways to solve your debt issues. Some of the methods might be a bit radical and difficult for you to swallow but you have to remember that it is for the best and you would do well to adhere to the strict guidance of professional financial advisors. Start taking charge of your own finances and do not let yourself be dragged down into the same pool of debts again.

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Category: Finances
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