The recent barely-averted recession has caused us all to tighten up our belts and hold on to our money especially tightly. But for all too many, that's not enough. The real estate roller coaster has put many people into huge pits of debt. There are many solutions for tending to debt, but without a little guidance far too many debtors pick the wrong option for them, harming their credit rating for years to come. Debt counseling, consolidation, settlement and even filing for bankruptcy are all necessary and useful services for people in debt, and it's up to you to find which one is best for your situation. Bankruptcy and settlement have, for better or worse, become the most commonly used methods of getting out of debt, due to simplicity and various other advantages they provide.
Bankruptcy is most commonly filed as a chapter seven or chapter thirteen. A chapter seven is the superior option, with debt being reduced or even dismissed entirely in some fortunate cases. However, it's not up to you to decide what chapter you file under! Since 2005, significant legal revisions have made it so that the court decides which chapter a bankruptcy is filed under, not the debtor. A means test, which is the first procedure to start up a proper bankruptcy filing, evaluates your income and expenses versus the standards for redeeming the debt. Falling short of the IRS-set standards of the means test will allow you to file a chapter seven. However, if you can even pay as little as a hundred dollars monthly towards your debt, then you will have to deal with a chapter thirteen filing instead.
Chapter thirteen is the most common form of bankruptcy filing today due to the restrictions on getting a chapter seven. It's not nearly as friendly as a chapter seven, and the whole process is overseen by a legal representative of the court. No one wants to have a stranger checking up on their daily, weekly, or monthly budgets. Furthermore, the chances of getting the kind of debt reduction that a chapter seven grants is slim with a chapter thirteen. This is why recently more people are striving to avoid bankruptcy filings and go for debt settlements instead.
Debt settlement, also called debt negotiation, is a somewhat new and hard line way of debt relief that gives a lot of advantages over counseling, consolidation, and bankruptcy. First, the benefit the borrower sees immediately is that their payments are about half when all their bills are put into a settlement compared to their current payments. The types of credit accounts that you can place into a settlement are credit cards, department store accounts, unpaid utilities, doctor bills, and additional kinds of unsecured debt. Additional pros of this method are: If you get your debts settled, you can stop your salary from being attached or garnished - If you let your creditors know you?re trying to settle your bills with this procedure, they will be assured they will get at least some of the money you owe them. Because of this, they aren?t as likely to sue you while the settlement process is ongoing. Debt elimination ? Existing amounts can go down by between 40 to 70%, depending on your account holder. Most of the time, the combined accounts in a settlement get taken down by 50%.
Added security for secured assets ? Getting your payments down and getting rid of some of your unsecured debt helps you get rid of the pressure on your secured assets. For instance, debt settlements are mixed in with loan modifications to assist homeowners in lowering all their payments geared towards their debt and thus, improve their chances of being able to get new terms on their mortgage.
Completely paying off your bills ? When the debt reduction is done, the schedule set up to pay it off is variable, but usually is about 48 months. However, if you only made minimum payments on the previous accounts, it may take more than 25 years to get rid of it.
Debt settlement and negotiation is becoming an increasing accepted manner for consumers to address the issues of debt overload without filing for bankruptcy. Consumers still need to review all available forms of debt relief before making a decision. One of the best ways to sort through the available options is to contact an attorney with experience in consumer debt relief to decide which option is in the best interests of the consumer. Getting on the road to financial recovery is simple the matter of taking that first step. - 29866
Bankruptcy is most commonly filed as a chapter seven or chapter thirteen. A chapter seven is the superior option, with debt being reduced or even dismissed entirely in some fortunate cases. However, it's not up to you to decide what chapter you file under! Since 2005, significant legal revisions have made it so that the court decides which chapter a bankruptcy is filed under, not the debtor. A means test, which is the first procedure to start up a proper bankruptcy filing, evaluates your income and expenses versus the standards for redeeming the debt. Falling short of the IRS-set standards of the means test will allow you to file a chapter seven. However, if you can even pay as little as a hundred dollars monthly towards your debt, then you will have to deal with a chapter thirteen filing instead.
Chapter thirteen is the most common form of bankruptcy filing today due to the restrictions on getting a chapter seven. It's not nearly as friendly as a chapter seven, and the whole process is overseen by a legal representative of the court. No one wants to have a stranger checking up on their daily, weekly, or monthly budgets. Furthermore, the chances of getting the kind of debt reduction that a chapter seven grants is slim with a chapter thirteen. This is why recently more people are striving to avoid bankruptcy filings and go for debt settlements instead.
Debt settlement, also called debt negotiation, is a somewhat new and hard line way of debt relief that gives a lot of advantages over counseling, consolidation, and bankruptcy. First, the benefit the borrower sees immediately is that their payments are about half when all their bills are put into a settlement compared to their current payments. The types of credit accounts that you can place into a settlement are credit cards, department store accounts, unpaid utilities, doctor bills, and additional kinds of unsecured debt. Additional pros of this method are: If you get your debts settled, you can stop your salary from being attached or garnished - If you let your creditors know you?re trying to settle your bills with this procedure, they will be assured they will get at least some of the money you owe them. Because of this, they aren?t as likely to sue you while the settlement process is ongoing. Debt elimination ? Existing amounts can go down by between 40 to 70%, depending on your account holder. Most of the time, the combined accounts in a settlement get taken down by 50%.
Added security for secured assets ? Getting your payments down and getting rid of some of your unsecured debt helps you get rid of the pressure on your secured assets. For instance, debt settlements are mixed in with loan modifications to assist homeowners in lowering all their payments geared towards their debt and thus, improve their chances of being able to get new terms on their mortgage.
Completely paying off your bills ? When the debt reduction is done, the schedule set up to pay it off is variable, but usually is about 48 months. However, if you only made minimum payments on the previous accounts, it may take more than 25 years to get rid of it.
Debt settlement and negotiation is becoming an increasing accepted manner for consumers to address the issues of debt overload without filing for bankruptcy. Consumers still need to review all available forms of debt relief before making a decision. One of the best ways to sort through the available options is to contact an attorney with experience in consumer debt relief to decide which option is in the best interests of the consumer. Getting on the road to financial recovery is simple the matter of taking that first step. - 29866
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for instant bad debt consolidation advice and guidance.
