The pros and cons of a bankruptcy loan

2007-03-08 10:33:40

( Financial )



If you have spiraled into the vicious cycle of debt and are sick of non-stop letters and phone calls from creditors, you may need start looking for a way to pay off your debts without declaring bankruptcy.

A bankruptcy loan is intended to help individuals or companies overcome crippling financial difficulties. However, you can also avail of a bankruptcy loan after filing for bankruptcy to help restore your finances. In fact, most loan facilities offer bankruptcy loans after bankruptcy when an individual has paid off all creditors.

A legitimate and respected debt relief firm specializing in bankruptcy loans, can help you in the task of eliminating your debts. Their experienced financial specialists can help you find the best loans with the most competitive terms and rates, and at the same time, help you negotiate with your creditors.

A bankruptcy loan can dramatically improve your credit rating when you pay in full and on time. This can help you begin to restore your credit, qualify you for loans with better interest rates and put you back on the right track financially. You can consolidate into a single monthly due, lower interest rates, reduce monthly payments, eliminate over-the-limit and late fees, improve your credit rating and stop harassment from creditor phone calls. A bankruptcy loan is also an opportunity for you to begin practicing good financial management.

On the other hand, a bankruptcy loan also has its cons. Instead of spending a couple of years paying off your credit card debt, you may well spend the next 10 to 30 years paying your bankruptcy loan which is a consolidation of your total debt. Even though a bankruptcy loan's interest rates are less, if you pay the loan over a period of many years, you end up paying more than if you had paid each individual loan.

It is also easy to get back into debt because you may be tempted to start using your credit card or continue your old spending habits. A bankruptcy loan is a secured consolidation loan, which means you have a collateral for the loan - be it your car, land or in most cases, your home. Therefore, in the event you are unable to pay off the loan, you may lose whatever property or possession you have put up for collateral.

So, before making a decision, you should consider thoroughly all the pros and cons to ascertain whether a bankruptcy loan is the answer to your financial situation. You can also consult a financial expert on refinancing after bankruptcy, getting a mortgage after bankruptcy, unsecured loan companies, unsecured loan rates or unsecured consolidation loans.


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