Bankruptcy or Debt Settlement and your credit-Facts to know

The current recession which in my view is more like a depression is only going to get worse over time. In the end one can make a strong case that we will sadly loose our status as the lone world super power as China adds nuclear power plants and takes over the role. Many ask do you file bankruptcy or settle the debt if in a position of financial disaster? The consensus is debt settlement over bankruptcy because of the credit limitations associated to bankruptcy.

This is completely wrong. If you are in financial distress you have to get rid of the problem and most often bankruptcy is a much better option than settling.

After filing bankruptcy you need to downsize your life into something you can afford. Our grandparents knew that it wasn’t what you made but how you spent it. They raised more kids, with fewer resources, and were happier for it. Look at where our nation has gone as people are now taught to buy debt from day one. The rising rate of bankruptcy is a result of many factors but mainly a deviation from this simple principle. This is a reflection of the entire system.

The biggest fear for many is how they can function with demolished credit after bankruptcy. The reality is yes your credit will be compromised after the bankruptcy is finalized. However if you can afford to keep your payments on time prior to the discharge of the bankruptcy you will be in tremendously better shape after all is finalized.

One myth that needs to be dispelled is that you are not going to be able to finance anything for 7 to 10 years. What you need to realize is that bankruptcy is not as uncommon as you might think. Industries such as the automobile and the housing industry would be nonexistent if people couldn’t get financing after having a bankruptcy.

The reality is that you can finance a house within 2-3 years after a bankruptcy. The key is to get at least three secured credit cards and make sure you make payments on time for at least 12 months. This is what builds your credit primarily. Also be sure to try to keep at least two thirds of the card limit free. If you run the card up higher than this it will negatively impact your credit without a doubt.

For more great tips check out this article on chapter 7 bankruptcy information. If you are looking at a chapter 13 be sure to check out these chapter 13 bankruptcy rules. For other tips and must know info as well as general information check out this guide to filing bankruptcy.