What is Bankruptcy?
Bankruptcy is when a person or business officially declares the inability to pay back creditors the money that was previously borrowed.
This should only be done as a last resort, because bankruptcy will affect every aspect of your life. It will also affect your ability to get loans, mortgages, and credit card in the future. However, for some people, declaring bankruptcy means finding freedom once again. It wipes your slate clean so to speak, and you can start over again with your credit.
Things to do before declaring bankruptcy:
However, there are a number of things you should try before you declare bankruptcy. One of these things is debt consolidation. Debt consolidation cannot help everybody concerned with money problems, but for some, it is just the boost needed to keep them from declaring bankruptcy.
Debt consolidation is basically taking all of your loans and paying them off using one large loan. You then have one monthly bill to pay instead of a number of smaller bills. This can save you money in the long run. Why? The one large loan will usually have a secured lower fixed interest rate. This is especially advisable if you are considering declaring bankruptcy because of high credit card debts.
Credit cards have very high interest rates