When considering different types of debt relief programs and bankruptcy, it's very important to understand what you're getting into by asking the following questions:
1. Is your credit score going to drop?
It is. This is true with bankruptcy and other programs. Your credit score will go down. However, remember that your score is also going to drop if you keep missing payments, lose your house, or rack up more debt, so this is perhaps not quite as negative as it sounds. Your score is dropping either way, so you must find the best solution for you.
2. How long will the program take?
The answer here depends on a lot of factors, such as the type of program or bankruptcy that you use and how much debt you have. Still, you need to know roughly what you're looking at before you start. With Chapter 13 bankruptcy, for instance, you can set up a repayment plan that may take months or years.
3. How is this going to impact your taxes?
You are still going to need to file tax returns, and the debt relief solution you choose could be reflected heavily in your return. Be sure you know of the tax implications before you start, and then learn how to file your taxes properly.
Most of all, you just want to be sure that you're informed. You need to know about all of your options, what legal steps to take in Washington, and how the plan is going to change your life financially. Don't rush through this, but take your time and investigate everything along the way, and you can find the right solution.
Source: Credit.com, "14 Questions to Ask a Debt Settlement Company," Gerri Detweiler, accessed Sep. 27, 2016