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Filing for a bankruptcy may seem an ideal solution for the debt problem. But bankruptcy is not that simple and definitely comes with a price. Bankruptcy stays on the record for seven full years. During this time, applying for any kind of loan will be almost next to impossible. Obtaining credit card will be a problem too, and so would be building upon a fresh credit history. Filing for bankruptcy involves a lengthy court procedure and tons of paperwork and will need the service of a lawyer. Lawyer's fees and the filing process will cost additional money, which will make the situation worse. Filing for bankruptcy might not be completely successful, and the court may order on clearing some part of the debt of not full.
There are some methods that can prove to be helpful in clearing the debts, before filing for bankruptcy. If none of these are successful, only then bankruptcy can be thought as an alternate.
Balance transfer process involves transferring all outstanding balance onto a new credit card which offers 0% interest rate for as long as a year. Interest free period makes it possible to pay off a fixed amount of debt. balance transfer cards should not be used for anything else until the outstanding balance has been cleared off.
Secured loans are an option for home or property owners. These loans have better interest rates than credit cards, and so clearing them off would be easier. The equity of homes will act as security and the interest rates and the loan amount depends on the value of the property.
These loans are although of higher interest rates, it will be better paying off one loan amount with a fixed interest rate, than to distribute the money across various credit cards with varying interests.
Home owners can remortgage a certain amount from their equity to consolidate the debt and pay off as a single loan. These will have reduced interest rates, and make the monthly payable amount, fixed.
Signing up for new credit cards with lesser interest rates and transferring the outstanding balance can also be another solution. Although there will not be much of an advantage here, lesser interest rates can certainly help. Making use of introductory offers like interest free periods, or easy payback schemes can provide some respite and help pay off debt more easily.