Debt Free Destiny

Bankruptcy may seem like the only option for those with mounting debt, but it’s not as failsafe as it may seem. As unemployment rates rise steadily, home foreclosures increase, and the calls from debt collectors start arriving weekly or even daily, it would be easy to think of bankruptcy as the best option to clean up your credit record.

Filing bankruptcy is a long process that comes with headaches of its own. You may also find yourself dealing with some of the fallout, such as:

Damaged credit record. Your credit record won’t be repaired overnight. It will take some hard work and patience on your part, and some damage control on the part of your lawyer or whomever is helping you to get your record cleaned up.

Dishonest credit counselors. Not all credit counseling services are reputable, so be sure to do some research before you sign on. Make sure the rates they charge are standard for their types of services. Steer clear of any organization that requires a large fee up front—they may not be as honest as they would like you to believe. You wouldn’t want to find yourself in a worse situation than you may be in already.

“Credit doctors”. Be wary of companies who claim to have a magic repair kit when it comes to rebuilding your credit rating. All legal methods for restoring a person’s credit can take up to two years; anyone claiming to be able to do it in less time is taking advantage of you. Most of these “credit repair” businesses or “credit doctors” use dishonest practices to draw customers in—don’t buy into their advertisements or anything they promise.

Falling back into bad spending habits. Now that you’ve finally gotten that fresh start you were looking for, it’s tempting to dust off that plastic and give it a bit of a workout. Stop right there, before you catch yourself falling back into your old ways. As you work on rebuilding your credit score, take some classes or work with a reputable (see above) credit counselor to learn how to budget and get your spending under control. Perhaps your spendthrift ways go a bit deeper than merely wanting the biggest and the best. Talk to a licensed counselor about your uncontrollable spending urges and see if they can help you get to the real root of your problem.