With consumer debt at an all time high, having a debt can be overwhelming. Some people have looked into the internet and have seen advertisements promising debt relief as a quick solution. Enticing as these ads may seem, it is important to be on the lookout for the validity of the claim.

A good deal of these promise a quick fix, but that quick fix might be bankruptcy. Yes, bankruptcy is one way to address your financial problems, but in most cases it should be a last resort. The fact that you claim bankruptcy remains on your credit report for ten years which means that your chances of getting credit, employment, a place to live or insurance are significantly lowered.

It’s a good idea to consider other alternatives before deciding to claim bankruptcy. Speak with your creditors. Oftentimes a re-payment plan can be worked out that is modified or can be paid in installments. Credit counseling services can work with you and your creditors to make debt repayment plans.

If you are thinking about a second mortgage, be careful. These loans need your house as collateral. Bankruptcy can put an end to foreclosures, debt collection activities and it may get rid of unsecured debts. Exemptions are provided that let you keep certain assets. However, personal bankruptcy does not typically eliminate child support, fines, taxes, alimony and in some cases student loans.

It will not usually allow you to keep your property if your creditor has a security lien or mortgage that has not been paid. A relatively recent tweek in bankruptcy laws creates certain hurdles that you must overcome before you can even file for bankruptcy, no matter what type of bankruptcy. First, you have to get credit counseling from an organization approved by the government within six months before filling.

Also in certain cases you have to pass a test that requires that you confirm that your income doesn’t exceed a certain amount.

Mallory Megan works for a debt collection company. She also composes articles on business, finance, consumer spending and collection agencies.

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