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Options to consider before filing for bankruptcy

Pennsylvania residents may not have heard about the recent recommendations from the Federal Trade Commission about ads in newspapers, telephone directories and magazines discussing the consolidation of debt. According to the FTC, consumer debt is at an all-time high and individuals should use caution when a seemingly quick fix is offered in a publication. Many companies offer the assurance of debt relief; however, often the bankruptcy option is recommended, which can cause a long-term negative impact on a person's credit history and stays on a credit report for 10 years. This can result in difficulty being able to get insurance, housing, credit and even a job for years to come.

The FTC encourages consumers to pay close attention whenever the promise of debt relief is given and to always read between the lines. Specific things to be cautious with are ads that offer consolidation of bills into a single monthly payment; offers to stop credit harassment, tax levies, foreclosures, repossessions and garnishments; the promise to being able to keep your property; and especially ads that offer the ability to get rid of debts by utilizing the protection offered by federal law.

The Commission advises individuals to consider alternate possibilities before considering filing for bankruptcy. This might include talking with creditors to work with them to find a modified payment plan, considering a credit counseling service that can mediate between clients and creditors to find a debt repayment plan, and taking a close look at any other options that may be available before taking out a second mortgage or home equity line of credit.

Any other options that are available to consolidate debt while avoiding using the home as collateral is recommended. If there are no other options available a bankruptcy lawyer may be able to provide solutions to assist in debt reduction.

Source: FTC, "Debt Relief or Bankruptcy?", December 10, 2014

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