Bankruptcy Vs Debt Management

Filing Bankruptcy Vs A Debt Management Programme

If you’re considering filing bankruptcy Vs a Debt Management programme you are probably in a situation where you feel your debt has become unmanageable. At this point it can often seem like the best possible outcome is to declare yourself bankrupt and simply write off your debts. While this may work as a short term solution there are long term effects of bankruptcy which are not easily dealt with. Therefore, you might want to consider the ramifications of both bankruptcy and Debt Management Programmes before you make your decision.

Look at the Situation

Which choice you make will very much depend on what kind of financial situation you are in and what your immediate goal is. If you are simply looking for a quick fix in order to cut the creditors out of your life no matter what the cost, you might think bankruptcy is the best option and maybe it is. It is, however, a declaration that you have no ability to or interest in fulfilling your financial responsibilities and will harm your future credit and business prospects.

In order to uphold your reputation as a good customer and a responsible person to deal you may want to consider Debt Management. By consolidating your debt and paying it off in single instalments you are, essentially, signalling an interest in honouring your debts, even if it is not at the agreed level. Therefore Debt Management will not directly affect your credit rating like Bankruptcy will.

Consider also whose name the debts you are paying off are in. Do you share them with a business or life partner? If so, this is not necessarily a decision you need to make alone. The other person may have an insight into the best way to handle the debt too.

Your assets must also be taken into account when making this decision. If you own property or properties it will have an impact on whether or not you will be able to declare bankruptcy. If you declare bankruptcy while in possession of property it can be taken from you. This is a big risk, particularly if you are currently living in it, and you might want to consider consolidation as opposed to putting your home on the line. Do note, however, that if a mortgage is one of your debts it will not be possible to consolidate it with the others as it is secured against an asset.

Also, you must consider the amount of surplus cash you have coming in. If you have any more than what is considered to be your basic living expenditure it will be taken off you during bankruptcy. If you would prefer to hold onto any extra income you should consider a Debt Management programme.

If it is the case where you have no assets, no income and no property you may well decide bankruptcy is the right option and certainly it is difficult to put up the case against it. Do consider however that your future ability to conduct business, use credit products and deal with financial institutions will forever be affected by it. Think long and hard about whether or not that is a step you want to take.

In the end the contest of filing bankruptcy Vs a Debt Management Programme can only be decided by fully considering your own personal circumstances. Bankruptcy may seem like a quicker solution to your problems but it also carries a lot of stigma with it. A Debt Management programme, though a much longer term solution, is also a far less problematic way out of debt.

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