Credit Rating
Your credit rating determines the interest rate on your credit cards, your mortgage rate and much more.  It can even affect whether or not you can get a high-level job.  As a result, protecting your credit rating over the long term is almost as important as saving money for buying a home or car.  Declaring bankruptcy will ruin your credit rating in the short and long term.  A bankruptcy will stay on your credit report for at least seven years, and if your lender has worked with you for a long time, it may stay on your record even longer.  Lenders shy away from people with bankruptcies on their record, and if you try to use a lender for a mortgage who is aware of any past bankruptcy, it will have an effect.

 

New Bankruptcy Laws
Declaring bankruptcy has always had a negative effect on your finances and credit rating, however it now it is also more difficult to declare bankruptcy.  Former President George W. Bush signed into legislation new laws that completely reformed our system of bankruptcy.  In 2005, the President Bush signed the biggest rewrite of U.S. bankruptcy law in thirty years, making it difficult for debt-ridden Americans to wipe out their obligations.  This means that there are more hoops to jump through and more documentation to present in order to declare bankruptcy, which takes time, money and resources you may not have available.  It also means that if your bankruptcy isn’t handled correctly, you could be taken for a ride by an attorney who tells you that you have nothing to worry about.

Debt Settlement
An option more and more Americans are taking advantage of is something called debt settlement.  Rather than attempting to escape your debts, you can actually face them down, pay them off and pay less than you owe.  Instead of ruining your credit for a decade, you could preserve your long term credit and not having to throw away your future.  And, while banks and credit card companies were able to influence bankruptcy law, they are now facing economic hardship and are in need of your cash.  This means that they are more willing than ever to negotiate your debts in such a way that will benefit you, if you’ve got a high-quality debt settlement specialist working for you.  This could be your time to avoid bankruptcy and take advantage of the credit card companies, instead of the other way around!