Paying Off Debt versus Personal Bankruptcy

Debt counselors advise you to declare yourself bankrupt simply because there is less work for the consultant and a trustee does the rest of the work. The question is what you think about it and how bankruptcy can affect your future life. Weigh the changes and think about whether you can live with these changes and about what consequences might arise if you declare yourself bankrupt.

Personal bankruptcy is worthwhile only if the debt is very high and you have no more reserves to pay off at least 2 to 10 percent of the total amount monthly.



It is best to contact your creditors and make a current debt plan to determine if it is worth paying off the debt.

This is almost your whole heart of the planning and ultimately the basis of your decision. Then you decide together with your family whether there are no saving opportunities or if you should take up secondary activities to pay off your debt. Check whether you can receive any social benefits from the state. You can claim help from the AWO or DRKS. There are also several computers on the internet to calculate the amount you can claim from the social services.

It is completely up to you to choose a form of debt consolidation and repayment. This decision requires both discipline and renunciation.

Advantages and disadvantages

Both forms of debt have advantages and disadvantages and everything depends on the circumstances. Let’s look at debt repayment in more detail first. This is worthwhile if your debt is manageable, if no savings have been made ? and if you are disciplined enough.

The debt can be paid in installments, just like in case of personal bankruptcy. However, the repayment of the debt leads to the deletion of the entries in the credit bureau, which is simply necessary in certain occupational groups. You do not receive the visit of the bailiff if your relationship with the creditors is good and honest. The requirement to pay off is to have a decent income. You can calculate the repayment rate per creditor and not rely on the attachment limits. In other words, you have more benefits and freedoms.

The disadvantage is that you have to live with the tension of having to pay off the debt and with the uncertainty that the creditor may lose their patience and ask the bailiff or the PA to seize your assets. You also need patience and discipline to stick to the repayment plan.

In case of personal bankruptcy, you have to inform the trustees on your financial matters and to obtain their permission to do anything that can affect your financial situation. The amount of the debt is only secondary when it comes to consumer bankruptcy. This is the best solution for you if you are hopelessly in debt. The repayment of the debt is indeed dependent on your income, but nothing can be paid if there is nothing to pay from. You can obtain the remaining credit debt relief within a short period of time. However, you have an entry in the credit bureau that cannot be cleared earlier than three years.

It is up to you to decide what is best for you. No one can make this decision for you.