Better Alternatives Than Chapter 13 Bankruptcy Filing

Chapter 13 bankruptcy filing is a way for individuals in the United States to go through a financial reorganization supervised by a federal bankruptcy court. The Bankruptcy Code anticipates the goal of Chapter 13

as enabling income-receiving debtors a debtor rehabilitation provided they fulfill a court-approved plan.

Nowadays as a result of the global economic crisis, unemployment, and plummeting home values, personal bankruptcy filings have reached an all-time high this year, there is a better option to reduce or eliminate personal debt without the severe and long-lasting consequences of filing personal bankruptcy.

Final statistics showed that both Chapter 7 bankruptcy and Chapter 13 bankruptcy has become not wise to go into plans for consumers tied with mountains of debt, but there are other alternatives.

Under the new law, a heavily indebted consumer may file a petition for bankruptcy by attending the full 6 months of credit counseling.

If someone who have bad debt has been filed personal bankruptcy to prevent or delay the foreclosure of their homes while rearranging their finances, they will actually lose their homes during the the required 6 months time period of credit counseling.

Furthermore, the repercussions of filing for bankruptcy are incriminating . among others : the bankruptcy remains in filer’s credit record up to 10 years, inability to obtain
the credit or loans during this period (home loans, car loans or other), as required for a down payment for utilities, rent an apartment is rejected, and very probably being passed over for a job, because the more employers who do credit checks as part of their routine job applicant screening process.

And you know, that filing personal bankruptcy is not cheap! Typically costing $2,300 – $4,300 depending on whether a chapter 7 or chapter 13 is filed.

These following better option for debt relief :

1. Debt settlement: also known as debt arbitration or debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full, in most cases by up to 50% or more. As long as consumers continue to make minimum monthly payments, creditors will not negotiate a reduced balance. However, when payments stop, balances continue to grow because of late fees and ongoing interest. Consumers can arrange their own settlements by using advice found on web sites, hire a lawyer to act for them, or use debt settlement companies.
2. Debt consolidation: This involves combining multiple loan payments into one smaller, more manageable monthly payment. This may or may not involve taking out a new loan at a lower interest rate than the multiple existing loans. Put another way, debt consolidation is the process of taking out a new loan to pay off a number of other debts. Most people who consolidate their debt are usually doing it to attain a lower interest rate, or the simplicity of a single loan. Also known as a “consolidation loan“.
3. Credit counseling : This is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. Consumers who have a debt load which has not yet reached critical stage can be educated on the ways and means to manage and reduce their debt over time to prevent a serious financial crisis from occurring.

Chapter 13 bankruptcy is last option to consider what you need for debt relief.

Also, read related post :

Thinking about Student Credit Cards and Student Loans

The Facts About Personal Bankruptcy

The Last Debt Solution Should Be Bankruptcy?