Debt Consolidation Options
Be Careful About Ads About Debt Relief They Might
Really Be Offering Bankruptcy
Debt problems are often caused by illness, unemployment,
or overspending such as credit card debt. In your desperation to get out of debt, be careful that you don't fall for a scam. have yo seen ads that say-- Debt
have you worried? You are among many. Debt
is at an amazing all time high, millions are filing for
bankruptcy. Ads may promise
debt relief, when they are really steering you towards
bankruptcy .one way to deal with large debt is bankruptcy, but it should be the option of last resort,not the first.
Bankruptcy has long term
negative impact on your credit rating.
A bankruptcy stays on your credit report
for 10 years, it can prevent you from getting a loan, a job or a lease.
Be careful if the advertisement for debt consolidation says:
bills into one low monthly payment without
borrowing any money.”
“End or Stop Creditors from
harassing you, stop foreclosures, repossessions,
tax levies and paycheck garnishments,”
“Keep Your Property while getting out of debt.”
“Wipe out your
debts! Consolidate your bills! By
using the protection and assistance provided
by federal law. This using the federal law is really another way to say file for bankruptcy which will harm you credit rating and cost you attorney fees.
If you are in debt, need to consolidate bills, having
trouble paying your bills, try these methods to solve your problems before filing for bankruptcy.
- Talk with your creditors. Especially credit card companies, they are often willing to work out a payment plan, wipe out interest charges to receive the principal owed on the debt in a timely manner
- Use a non-profit credit counseling service.
they can contact creditors for you and work out a debt repayment plan. Some nonprofit organizations charge a small fee or are free.
- Be careful about putting you home up as collateral to secure a second mortgage or for a line of credit. If you fail to make payments you can lose your home.
Bankruptcy- What You Need to Know
If the debt is beyond solving with any of the listed methods bankruptcy may be a viable option. There ar two types of bankruptcy for individuals, Chapter 13 and Chapter 7.
Chapter 7 is full bankruptcy where most bills are " wiped out" by a federal bankruptcy court. Usual exemptions -- exclusions include cars, work tools and basic household furnishings. Property may need to
be sold by a court appointed bankruptcy
trustee—or returned to creditors.
You can discharge your debts
under Chapter 7 only once every six years
Chapter 7 bankruptcy most often doesn't let you keep property when you have an
unpaid mortgage or lien against it.
Chapter 13 is partial bankruptcy, where your bills are placed with a court trustee to whom you make payments, these payments are than spread out among you creditors to pay them off within 5 years. You get to keep property such as house and car.
Chapter 13 and Chapter 7 Bankruptcy both get rid of
unsecured debts ( howeer, the new bankruptcy law retains your responsibility to pay credit card an other unsecured debts incurred with 12 months of the bankrupty filing). They both stop foreclosures, repossessions, garnishments,
utility shut offs, and other debt collection actions against you.
Both have provisions which allow
you to keep certain assets, although exemption
amounts vary. Personal bankruptcy does not wipe out child support, alimony, court fines and fees,
taxes, and some student loan obligations.
Federal bankruptcy court filing fees are $185
for Chapter 13 and $200 for Chapter 7. You have to pay an attorney
additional fess. Shop around to find an attorney with reasonable fees and one with whom you feel comfortable. See Hiring an Attorney-Lawyer- What you need to know -- for more information.