Hasty Bankruptcy Filers Likely To Regret it Later (NAPSA)—As reports showa surge in personal bankrupicy filings in anticipation of changes to federal bankruptey laws, the American Financial Services Association Education Foundation (AFSAEF) has an boyportant message for consumers ahout to jump on the bandwagon: stop and think twice. “Wa one should file for hankruptcy without a complete understanding of the legal and fmancial consequences,” says Susie Irvine, president and CEO of AFSAEF. While bankruptcy may seem like a quick fix, she adds, it leaves a bad mark on an individual’s credit record for up to 10 years and long-lasting problems-—ranging from an inability to get credit frara sorme lenders (or havingto obtain it at higher interest rates and lowerlimits on credit lines) to difficulties finding employment or renting an apartment. “For all these reasons, bank- ruptcy should be used only as a last resort, after exhausting all other viable alternatives,” says Irvine. Reports show that average bankruptey filings were wp in the first quarter of 2001 compared with the same period last year. Randy Lively, president and CEO of APSA, believes the rush to file may be largely unwarranted since the vast majority of individuals who currently file for Chapter 7 relief (liquidation of assets) would still be eligible to de so under the proposed changes. For a person in financial distress, the first step should be to visit a nonprofit consumer credit counseling service to determine avaiable options. Ideally, horrowers should seek help at the first signs of financial difficulty--rather than waiting until their situations reach a point where bankruptcy is the only way out. AFSABFlists the following “red flags” that could inchcate trouble: Being denied credit—Creditors deny credit to people whom they believe are already overex- While bankruptcy may seem like a quick fix, it leaves a bad mark on an individual's credit record for up to 10 years. tended or who are having prohlems paying their bills on time. Using credit cards to stay afloat—lIf you're using credit cards to pay basic living expenses because there’s no other way to pay them, you could be headed down a slippery slope. Borrowing money earmarked for other financial obligations—Juggling bill paying each monthor depleting savings ta paybills doesn’t fix the problem. Not knowing how much you ewe-—-If you can’t figure out where your money goes each mouth, establish a budget and get a handle on your income, expenses and credit obligations. Making minimum payments—If you pay only the minimum amount due on your bills, you'll be paying off your debt for a long time. APSAEFoffers numerous educational resources to assist consumers in managing their finances, including a pamphlet entitled “Bankruptcy: Facts and Consequences.” Consumers can receive a copy by sending a selfaddressed, stamped (number 10) envelope to: AFSA Education Foundation, 919 18th Street, NW, Dept. BR, Washington, DC 20006. To learn more, visit the Web site at www.afsaefiorg.
