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Consumer Update

Avoid Bankruptcy

            Debt got you down? You’re not alone. Consumer debt is at an all-time high. And many are filing for bankruptcy. Whether your debt dilemma is the result of illness, unemployment, or simply overspending, it can seem overwhelming. Be on the alert for advertisements that offer quick fixes. While the ads promise debt relief, they rarely say relief by may mean bankruptcy. Bankruptcy should be considered the option of last resort because it stays on your credit report for 10 years and can hinder your ability to get credit, a job, insurance or even a place to live. And keep in mind that bankruptcy usually does not erase child support, fines, taxes or student loan obligations.

            If you’re having trouble paying your bills:

  • Talk with your creditors. They may be willing to work out a modified payment plan.

  • Contact a nonprofit credit counseling service.

  • Carefully consider a second mortgage or home equity line of credit. While these loans may allow you to consolidate your debt, they also require your home as collateral.

Source:  Federal Trade Commission “Advertisements Promising Debt Relief May Be Offering Bankruptcy,” March 2000.

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