Bankruptcy is an option that still seems to be a choice for consumers in debt. The first time you file for bankruptcy, you are facing an almost year long process. Even with the known bad side effects that come with clearing your debt by bankruptcy, most people used it in previous years. Bankruptcy can be initiated by the creditors, but it is usually done by the debtor to clear deep debt.
There are three types of charges you suffer from when filing for bankruptcy. First you will have to pay the fees to the court; these fees are of a few hundred dollars and cover the expenses for the time you spend in court proving your case. Second, you will have to deposit more money for the administration of your bankruptcy. Thirdly you will have to pay the recognition of your bankruptcy. These costs can go up quite high and seeing as the lack of money is the main reason for choosing bankruptcy, it may not seem like a good deal.
But try to keep bankruptcy as a last resort and consider other alternatives before making such a decision. The best one would be debt settlement. This is when you negotiate with your creditors and so reduce your debt by quite an amount.
Information about this process can be found very easily on the internet and there are some simple requirements which you must meet before starting to look for a debt settlement company. The first thing you should have is unsecured debt, but not just any debt, it should be higher than 10 000 dollars, because debt settlement only applies for deep debt; if you have smaller debt you can either opt for debt consolidation or you could make more debt, you can always make more debt.
Debt arbitration, as it is also known, can reduce your debt with the help of a professional company for up to 60%. Most creditors will accept negotiation at the threat of bankruptcy but will ask for the payment in a lump sum, so it is best to start saving for your financial health.