Debts and Bankruptcy

Recommendations to manage your debts and how to declare bankruptcy.


Debts and bankruptcy

Debts and bankruptcy

Almost all people have some type of manageable debt, whether by using a credit card, paying for higher education or buying a house, a car or another valuable object.

However, in some cases, debts can become a problem. Sometimes this happens because the person has borrowed more than he could afford and in other cases because he has lost his source of income.

If you are going through a difficult financial situation and feel that the debts are out of control, you better not ignore the problem or let your debt accumulate further. Find more information about:  

  • Recommendations to follow. Know how to set up a budget, communicate and organize a payment plan with creditors.
  • Advisory services. Consult the services of reputable credit counseling organizations. These entities can advise you on how to manage your money and manage your debts. In addition, they can help you develop a budget and offer you free educational materials and workshops.
  • Rules for debt collection. Learn what debt collector practices are prohibited by the Fair Debt Practices Act.
  • Stay alert. In your effort to recover your creditworthiness, take precautions in the face of advertisements that offer quick solutions.
  • Bankruptcy or personal bankruptcy. Find out about the requirements you must meet before filing for bankruptcy. You must receive credit counseling prior to the bankruptcy application and participate in an educational session after submitting the application. 


Debt Consolidation

Debt Consolidation

By consolidating your debts you simplify the payment of all of them through a monthly payment. This is a good option if you are facing the payment of many debts and have difficulty paying them. Before deciding on this alternative, consult the National Foundation for Credit Counseling  and a credit counselor .  

You can lower the cost of your credit by consolidating your debts through a second mortgage or a home equity line of credit. However, this strategy involves certain risks. For example: by putting your home as collateral, if you cannot meet or are late with payments, you could lose it.

Debt consolidation loans have costs. In addition to interest, you may have to pay “points,” one point equals one percent of the amount you borrow. This type of loan can offer you certain tax advantages that other types of credit do not offer.


Bankruptcy Statement


Filing for bankruptcy has long-term and far-reaching consequences. Bankruptcy information is recorded on a credit report for a period of 10 years, which can cause you difficulties in obtaining a loan, buying a house, or getting a job.

However, it is a legal procedure that offers you the opportunity to restart if you cannot cope with the payment of your debts and have exhausted all previous resources.

Before filing for bankruptcy,  inform yourself about the requirements you must meet. You must receive credit counseling prior to the bankruptcy application and participate in an educational session after submitting the application.   

Stay alert and avoid fraud and scams .