Many people try to avoid filing bankruptcy because they feel that the filing will hurt them financially over the long term and embarrass them in front of friends and family. While it’s true that a bankruptcy filing will stay on a credit report for between seven and ten years, there are many reasons for filing bankruptcy that provide enough benefits to compensate for a credit score hit.

The first things to consider are the alternatives to filing bankruptcy. These alternatives vary depending on financial circumstances but three of the major concerns for people contemplating a bankruptcy filing are:

  • Foreclosure – For many, the first alternative to filing bankruptcy is trying to get a loan modification. Loan modifications can be problematic as an alternative to filing bankruptcy for a couple of reasons. The first is that a loan modification can take months during which time a foreclosure can still stay active. The second issue is that loan modification applications are rejected for a variety of reasons. Homeowners facing a foreclosure after the rejection of their loan modification application have one option which can stop the process in its tracks; filing either a Chapter 7 or a Chapter 13 bankruptcy.
  • Credit card debt – Debtors will often consider debt settlement as a viable option to avoid filing bankruptcy. In a typical debt settlement, a debtor will have balances reduced via negotiations with credit card issuers and the pay balances off over a time frame ranging from 18 to 48 months. While debt settlement can provide relief, a Chapter 7 filing can have debt balances eliminated in total in a process which takes about four months.
  • Vehicle repossession – The Chapter 13 bankruptcy code contains a provision called an “auto cram down” which can result in the lowering of monthly payments and the balance due on the car. The combination of extending the payment schedule and reducing the outstanding balance can reduce monthly auto payments by up to 80%.

In many cases, people try to avoid filing bankruptcy despite the substantial benefits offered by Chapter 7 and Chapter 13. The best way to determine whether filing for personal bankruptcy is in your best interest is to consult with a bankruptcy attorney to consider your personal circumstances. Choosing the best option can then assure you of the best result for you and your family. For more information please visit our site at http://www.bankruptcyattorneyincalifornia.com