Chapter 7 or Chapter 13 Bankruptcy is Last Option When You Need Help Debt Relief

Chapter 13 Bankruptcy

When you wake up in the morning and realize you’ve got a mountain of debt that you can’t pay it off. Your minimum payments barely (or doesn’t) cover the interest and each month you see your total rise a little more. You feel like you’re just treading water and could sink at any moment. It’s a scary place to be, but you’re not alone.

Millions of people are in serious debt problem and the number keeps going up. The reasons people get into debt are countless. Fortunately there are options to relieve the burden.

All of the solutions below do not work except you are committed to fixing your problem. You need to bite the bullet, follow the programs to the T, and do everything your advisors tell you to do. No solution will work if you are not serious about getting out of debt. Most reputable companies will help you stay on path and make the process as painless as possible. I know the industries get bad raps and that makes it tough to decide which course to take. Always ask for references, consult the Better Business Bureau, and do your due-diligence. It’s your life you’re trying to fix so take it seriously.

Consider Debt Settlement

If you are seriously struggling to make your payments and the amount of unsecured debt you’ve acquired is high, over $10,000, then debt settlement could very likely be your best option for debt relief. Good debt settlement programs will have you free of the enrolled debt in 12 to 36 months. When the debt settlement company starts the debt negotiation process and the creditor agrees to the partial payment, it is marked on your credit report as “settled charge off”.

Consider Enrolling into a Credit Counseling Program

Working with a CCCS agency is an effective way to solve your debt problems if you are not in a very serious bind and owe less than $10,000 in unsecured debt. It is less aggressive, more expensive, and typically takes longer than most debt settlement programs. A reputable CCCS agency has set up alliances with the major creditors. This alliance allows them to reduce or eliminate interest, stop late payment fees, reduce monthly payments, and negotiate a repayment plan.

A Debt Management Plan is better on your credit score than debt settlement, however it will still impact your ability to get a future loan on a home or car in the future.

Chapters 7 or 13 Bankruptcy

Considered the option of last resort for debt relief because the negative impact is long-lasting and far reaching. When you file for bankruptcy you get a court order saying that you don’t have to pay back certain debts. There are two different kinds of personal bankruptcy, Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy, commonly referred to as straight bankruptcy, involves the liquidation of all of your assets that are not exempt. Exempt properties may include cars, tools (for work), basic furnishings, etc. Everything else is fair game and could be sold by a court-appointed official or turned over to your creditors. To be discharged from chapter 7 now takes 8 years.

Chapter 13 Bankruptcy allows you to keep property you would otherwise lose, like a home or car, if you have a steady income. You would also be put on a repayment plan that uses your future income to pay off debts over a three to five year period. Once you’ve completed the plan, you’ll receive a discharge of your debts.

For both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy it is advised that you consult with an attorney which brings me to cost. On top of the attorney fees, you will have to pay around $300 in filing fees.

Before you can file for bankruptcy, chapter 7 or chapter 13, the law requires you to get credit counseling from a government approved organization within six months of filing. For Chapter 7, you must confirm that your income doesn’t exceed a certain amount. That amount varies by state.