Why to Avoid Personal Bankruptcy - The Best Debt Relief Options For 2010

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Filing for bankruptcy can be a painful experience hence it is best avoided.
There are alternatives for bankruptcy which should be explored by a debtor before considering bankruptcy.
Filing for bankruptcy has a major negative impact on one's credit ratings.
It brings down the credit scores by 250 points and the bankruptcy stays on the credit report for at least 7 to 10 years.
This majorly hampers the ability of an individual to get credit in future.
Some of the best alternatives to get you out of debt and to avoid bankruptcy are discussed in this article.
Consumer credit counseling service: Most of the credit counseling services provided are non-profit making services.
These counselors help customers in managing their money in order to pay off their debts through debt management tips.
At the same time they also negotiate new terms of repayment with their creditors.
This may include a lower rate of interest or removing penalty charges from the account.
Such steps help in bringing down the total balance that is due to the creditors.
Debt consolidation: This is most useful for those customers who have debt with many credit cards.
The credit card rate of interest is much higher than the normal interest rates charged by banks.
Here the debtor takes one loan with a lower rate of interest in order to pay off all other loans.
A debtor might opt for this debt relief method in order to secure a lower rate of interest or for the convenience of serving only one loan.
Debt settlement: This option is good for those customers who are very close to filing for bankruptcy.
In this method the debtor and creditor mutually agree to settle the account for much less than what is due on the account.
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