Get Out of Debt Guy

I'm Afraid of These Debt Consolidation Companies

Posted May 17, 2013

WRAL Reader Question

Dear Steve,

I want to get out of debt, but i'm afraid of the these debt consolidation companies and would like to know the steps of bankruptcy and how do I get started on the right track to get out of debt?



Dear Mary,

Congratulations for reaching that moment when you are ready to tackle the debt. I'm hoping we can get you over this hurdle and moving forward to a better financial life.

Dealing with debt is best accomplished by increasing income, reducing expenses, a combination of the both, or some sort of intervention.

Some people are critical of my frequent recommendation of bankruptcy. But bankruptcy is the only legal debt relief solution that terminates unmanageable debt, gives you a fresh start and a financial second chance.

Most of the fears people have about bankruptcy are totally unfounded. They are myth rather than fact.

Bankruptcy is not a common reason to not get a job, you can easily rebuild your credit after bankruptcy and better than before, you'll be able to buy a car, and get a mortgage again.

I wish it was a perfect world and bankruptcy was not necessary sometimes. And if we had a time machine to jump in to go back and do things differently then it would be the best possible solution. But we don't.

So if you spend the next five years digging out of your debt and not able to build an emergency fund for savings or get back to saving for retirement, all you are doing is sacrificing your future to repair your past.

If you happen to be 45 or older, time is not on your side to start saving for retirement. You can't delay, you must start as soon as possible or what ends up happening is you wind up losing out on millions in potential retirement savings because you wasted time you can't recoup in an approach to try and pay off problem debt from the past.

In no way am I suggesting you should walk out on debt you can afford to repay. I am suggesting when you are in an unmanageable debt situation that you should not make the problem worse by messing up your retirement savings to take action to try and fix the past.

There is no sense wasting a perfectly good mistake. Let's take what we can from this situation, take action to change it, and learn from it all.

The bankruptcy process is actually fairly straight forward.

About 70 percent of people that file bankruptcy qualify for a chapter 7 bankruptcy. In a chapter 7 bankruptcy your debt would be eliminated in about 90 days and then you could get straight to rebuilding your credit and saving.

I would suggest you use this bankruptcy directory to find a local bankruptcy attorney in your area. Give them a call and meet with them to discuss your specific situation.

Don't feel as if you need to make a decision about filing bankruptcy on the spot. Take what you learned from the meeting and go home and let it percolate for a couple of days. Don't feel pressured to make a rash decision. Make an informed decision.

If you have more questions, reach out to me here. If you think it's the logical approach to take then go for it and contact me after you file and I'll show you how to easily rebuild your credit.

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.