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Credit card debt: look into alternatives for repayment before bankruptcy filing

Credit cards are a very useful tool in today's economy. For many people, credit card use is a central part of their financial life. There isn't necessarily anything wrong with this either. When used wisely, credit cards can play an important part in a person's spending habits. The problem with credit cards arises when they are not put to wise use.

When a person gets caught in growing credit card debt, it can happen that bankruptcy becomes a looming threat. Bankruptcy can indeed help a person to get out of credit card debt, but the decision to file should be seen as a last resort for most people because of the damage it can do to credit, its effects on insurance, and the way it can affect other aspects of one's life. 

Before looking into bankruptcy, it is wise to look into other options for financial recovery. One of these is to seek out credit counseling. These services can be found at a nonprofit credit counseling agency, through the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

A credit counselor will help evaluate the debtor's financial situation and help determine the best course of action. The options will generally be to pay off the debt for oneself; a debt management plan; or working with an attorney for further assistance. Debt management plans allow a debtor to pay off their bills in one to five years time. Credit counselors can help debtors to manage their credit and get out of debt by assisting with negotiating better terms with the debtor's creditors and by providing guidance on budgeting money and meeting debt obligations.

Bankruptcy isn't the end of the world it is sometimes imagined to be, to be sure. But those facing serious financial challenges do well to look into other options that allow them to avoid some of the negative consequences of filing for bankruptcy. 

Source: Forbes, "This Week In Credit Card News" Beware Of Business Credit Cards, Tips For Summer Travelers," Bill Hardekopf, June 3, 2013.