In the current economic climate, many people are finding themselves in a state of personal debt crisis that rivals the larger-scale economic woes that many cities, states and even nations are currently grappling with. On an individual or family level, however, excessive debt can feel like a problem to which there are few solutions. When facing finances, though, it is helpful for Michigan residents to remember that, no matter how dire the circumstances, there are always choices and paths that can improve your financial health. In regard to debt relief, there are two main approaches: debt reduction strategies or filing for bankruptcy.
There are advantages and disadvantages to both strategies, and consumers typically benefit by making careful and informed decisions when approaching a debt solution. In the case of debt repayment, consumers can avoid significant damage to their credit report by following a repayment structure. However, digging out of significant debt can be overwhelming for some people, especially in cases in which the debts are excessive or caused by factors that were out of the consumer's control.
When considering bankruptcy, consumers may see their credit rating take a sharp dive, and it may take some years to rebuild a solid credit history. On the plus side, bankruptcy will bring an immediate stop to collections calls, wage garnishments and other collections efforts. There are several different types of bankruptcy filings, each with a different set of benefits for consumers.
Perhaps the most important thing for consumers to remember is that the first step toward financial stability is simply taking the time to assess your financial standing and work through the possible solutions. Michigan residents should know that no debt scenario is beyond repair. There is more than one path out of severe debt and depending on the laws in your state, which option is best for you may require an experienced bankruptcy and debt restructuring attorney to walk you through the options.
Source: Fox Business, "Decision Points: Bankruptcy vs. Debt Payment Plan," June 27, 2012