Bankruptcy Or Debt Settlement

With manyAmericansstill unemployed and unemployment benefits beginning to run out

, more and more people are faced with Bankruptcy as a possibility. If this is happening to you, a friend or a family member, carefully weigh your options before making this important decision. Here are some things to consider . . .

Chapter 13

With a chapter 13 Bankruptcy you are still required to pay a portion of your debts over the next 3 to 5 years in order for any remaining debts to be discharged. The unfortunate reality is that the vast majority of those that set out down this path don't end up completing their plans and so their remaining debts never get charged off. This means they end up with negative stigma that goes along with bankruptcy with very few of the benefits. For many, chapter 13 is a bad deal.

Chapter 7

With a chapter 7 Bankruptcy the person filing emerges debt free with the exception of certain debts that might be exempt such as a mortgage, a car payment, a student loan, or unpaid taxes or other debts that are classified as non-dischargeable. Many people opt for chapter 13 over chapter 7 because they are afraid they will have to part with their property but if you don't have much property to begin with the odds you will be able to hold on to most of it.

The problem with chapter 7 is that not everyone is eligible for it and there are strict qualifications. While I am not an Attorney and not qualified to give you legal advice if it were me I would ask my prospective Attorney how many 7's they do vs. how many 13's and I would keep asking until I found a lawyer who mainly did 7's. While a 7 may be harder to qualify for , there may be legal strategies your attorney can employ to help you qualify under the current state law. But if you just can't qualify a chapter 13 may be your only option. Or is it? How about . . .

Debt Settlement

Debt settlement is strategy whereby you stop paying your bad debts until they come calling and then you attempt to negotiate these debts down for 10 to 30 cents on the dollar. Many times the banks or their collection agencies are willing to accept less money because it may be a cheaper option than if you do file bankruptcy. They figure at least they will cut their losses. Typically the longer time you spend in negotiation the better deal they will give you. The scary part is you do run the risk of getting sued and ending up in court anyway.

There are many pros and cons to each method and in every case it is a good idea to seek out legal help.

Copyright (c) 2011 Antonio Filippone

by: Antonio Filippone

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