subject: Bankruptcy Debt: Is Bankruptcy The Best Way To Solve Debt Problems? [print this page] Bankruptcy Debt: Is Bankruptcy The Best Way To Solve Debt Problems?
We are all in debt to some extent, but debts can escalate out of control due to changing circumstances in your life. Many financial problems can be solved by debt management if the situation has not become too serious, and assuming you still have a source of income. For more drastic situations where you simply cannot see how it will ever be possible to repay the money owed, bankruptcy then becomes a real possibility. However, it is worth considering your options before making a definite decision to go down this route.
In the US, debt settlement is the main alternative to bankruptcy. This works by aiming to write off at least half of your debts, in order to make it possible to repay the rest. This is an entirely different approach to debt consolidation. This option can deal with very serious situations, though you do still need some free income to put aside to build up a pot that you can use for settlements. If you are advised that a settlement program is not an option, then it may well be that you do need to look into bankruptcy. The important thing is to take expert advice, so that you know what your options are.
You may find yourself in a financial bind where your debts are out of control due to many reasons such as, loss of employment, loss of income, reduced income or just plain getting overwhelmed with volume of debt you have taken on. There are several options for you in order to reduce or eliminate your debt altogether. The first option is debt settlement. You will want to look into several reliable companies to be sure you will be working with dependable agents that can actually help you do what needs to be done to correctly reduce your debt.
In order to make an accurate comparison when trying to find the agency for you, you may want to apply online to several of the most reputable companies and see what type of offers they come back with and then you will get a better idea as to what your different options are in reducing your debts. You should never just apply to one company and you should take care to avoid any contact at all with organizations that are not very well established or which can not demonstrate a good track record with many satisfied customers.
A settlement company may advise you that bankruptcy would suit your needs better. You will need to take this into serious consideration as bankruptcy may have more consequences and affect your credit longer than an alternative solution. There are two types of bankruptcy that you can file. The correct choice for you will be determined by the amount of your income, your secured debt, unsecured debts and properties you own.
Chapter 7 bankruptcy will probably be best for you if you have very little extra money after you pay your living expenses, if you can even pay these monthly expenses at all. This choice will allow most unsecured debts to be discharged, it is a fairly quick process and the creditors cannot contact you once the automatic stay is in effect. You will need to qualify in order to file a chapter 7 and have a pre-filing session with a credit counselor.
The advantages of Chapter 13 bankruptcy are that you can keep most of your property while making payments for three to five years to pay off your past due debt. You will only make one monthly payment to your bankruptcy debt trustee, who will then in turn make payments to your creditors in order for all your debts to be paid within that three to five year period. At the time of writing, you can qualify for this type of bankruptcy if you have unsecured debts below $360,475 and secured debts that are less than $1,081,400.
