There are very few things that you can do to your credit that will have the long-lasting negative consequences of filing a bankruptcy proceeding. Filing bankruptcy lets the lender see your willingness to walk away from debt that you incurred, and shows a lack of financial responsibility and personal accountability on your part.

Although you can re-establish yourself after your bankruptcy has been discharged, you will have the derogatory notation of bankruptcy remaining on your credit file for up to ten years. The majority of lenders will look at you as a credit risk once you have filed; those who do offer to extend credit to you will charge you the highest legal interest rates in the industry on low lines of credit that will not cover major expenditures like a new car or a home.

Many Debts, One Payment

Avoiding bankruptcy may be as simple as taking out a consolidation loan. A consolidation loan can allow you to consolidate all of your debt with a single lender – who will in turn pay off your creditors and keep you out of bankruptcy. Types of debt you might consider including in your consolidation loan payment include your mortgage, car payments, credit cards, student loans, and other debts that you pay high interest on or have a high balance left on the principle amount of the debt or loan.

Negotiate More Favorable Repayment Conditions

By bundling all of your debts into one, you will have streamlined payment to just one lender every month. This can help you get a better sense of the bulk of your personal debt, as well as allow you to negotiate repayment terms that are more appealing to your budgetary constraints and available income. For instance, whereas you might be paying ten years into the future on the high balance on your credit card at 19.99% – you might include this credit card balance into your consolidation loan and be able to pay it off completely at rates as low as 8%, depending on factors such as the amount you borrow, term of the consolidation loan, and your credit score. This can yield significant savings over time.

Your Personal Bailout

Once you have decided which debts to include in your consolidation loan, you should reflect on how you got into your current financial situation. Perhaps there were circumstances that were extenuating and beyond your control that caused you to be late with payments or get behind – such as job loss, sickness, or injury.

Maybe you got sucked into the variable rate mortgage vacuum – and ended up paying double or triple the original payment on your mortgage until you could no longer manage your payments. Whatever reason you have for your personal financial downfall, let your consolidation loan be your new beginning. Call it your personal bailout. Make it your goal to make timely payments to your new lender that is indicative of your fresh start. Pay on time, every time, and every month. This will set you on the road to financial freedom and lessen your burden during the economic strife that has engulfed the globe.

Author Bio: Mary Wise is a Bad Credit Loan consultant and has more than thirty years of experience in finances. She has helped a lot of people to obtain Bankruptcy Loans, home loans, car loans, personal loans and many other products regardless of their credit situation. Learn more about Personal Loans at http://www.badcreditloanservices.com

Category: Finances
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