In today’s unstable global economy, people are often looking for ways to ease the financial burdens on their bank accounts. Many families are stretched to their limits with credit card debt, student loans, and inflated mortgage rates, and are looking for ways to cut costs anywhere they can.

For some, it means clipping coupons, eating in instead of dining out, and carpooling to save on soaring gas prices. For others, there is no way to cut costs any more than they already have. In this case, filing for bankruptcy may be the only means of debt consolidation available. While filing bankruptcy is not a decision to be taken lightly, more people are choosing to file bankruptcy than ever before. Many states require people who are considering filing bankruptcy to meet with credit counselors. These credit counselors evaluate each person’s finances, and goes over all viable options. Bankruptcy is a last resort, and only used to keep a family or individual afloat, rather than an easy bailout. That being said, when a person does file bankruptcy, there are several options.

Most families and individuals file Chapter 7 bankruptcy. This allows people to hold onto necessities, such as a home or a car, as long as they are in decent standing with those particular creditors, or the creditors are willing to work with the individual to maintain their creditor/debtor status. After a bakruptcy is discharged from U.S. Bankruptcy court, the debtor then, essentially, as a clean slate.

Credit card debts are for the most part, wiped out. It offers many people a fresh start after making credit mistakes in the past. While it sounds like an easy solution to clearing debt, many people don’t fully recognize the repercussions filing bankruptcy will have on their long-term credit. It becomes difficult to rent an apartment with a bankruptcy on your record. And establishing any new credit becomes extremely difficult. For some, it’s not necessarily a bad thing to not be allowed to extend credit.

For others, it is a painstaking struggle to buy necessities such as furniture, or even get a loan for a vehicle without sky-high interest. Certain credit agencies will review credit for as far back as ten years. So a credit mistake you may have made as a single 18-year-old could still be having a significant impact on you as a family 10 years later! For many people the only way to help consolidate their debts is to file bankruptcy. However, filing bankruptcy is not always the best option for every individual, and is seldom the easy way out. Each person’s credit should be evaluated, as well as debt to income ratio, to determine if filing bankruptcy will be beneficial to you in the long run.

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