There are many tools in the financial recovery toolbox. In order to repair a person’s broken financial situation, a skilled repairman must know which tools are available and how to choose amongst them to obtain the best result for a particular person’s situation. In certain situations, for example where a person’s income was interrupted due to a layoff or illness, resulting in a “past due purgatory”, the financial repairman might just reach into the toolbox and use creative budgeting to try stifle miffed creditors. Somewhere in the middle, beyond the “past due purgatory” but before the creditors become a “litigious lynch mob” there is an intermediate stage, the “tough talking tinnitis” stage, where the never-ending phone calls loaded with threatening predictions of doom and gloom leave a person with ringing in the ears. At that stage, the best tool might be credit counseling or creditor prioritizing to make sure the “squeakiest wheels get the grease” until the other wheels begin to squeak.

If financial circumstances have you considering bankruptcy, there are two basic options. You can choose to file a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy. Chapter 7 is known as a liquidation bankruptcy, while Chapter 13 is a wage-earner’s reorganization. Both forms of bankruptcy have their advantages. Not everyone can qualify for both types of bankruptcy.

For overall financial health, one of the most important aspects is to have a strong credit score. Your credit score is an indicator of your likelihood as to whether or not you will repay a new loan on time and as agreed. Because of this, many banks use your credit score as a large deciding factor as to whether or not they will give you a new loan. Unfortunately, getting and keeping a good credit score can be difficult. For those who have previously declared bankruptcy, rebuilding credit can be an even more slow and painful process. Luckily, there are several ways a person can begin to rebuild their credit score over time.

Have you ever wanted to apply for a car loan, rental apartment or even your favorite retail store’s credit card but knew you would be rejected before even filling out the loan application? Have you applied for credit online and been rejected immediately? Do you immediately shut down or break out in hives at the mention of the c word? If you have ever experienced any of these things you will have an easier time understanding why bankruptcy should always be your last option when trying to settle your finances.

Bankruptcy. Just the word makes you think of people who have lost everything they own: house, cars, credit cards, etc, and have practically no hope of getting anything in the future without paying cash for it for years on end.