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as far away from bankruptcy as possible with a good debt management
program from a debt consolidation company.
If you are thinking about bankruptcy then it is time to get free
debt consolidation help from a credit counselor who can talk
to you about a debt management program. You may think bankruptcy
is your only option, but more than likely it is not. Bankruptcy
is the last thing you should be thinking about. Once you declare
bankruptcy your creditors can see that on your credit report for
the next ten years. Bankruptcy can get you out, but the residual
effects of not looking into a debt management program from a debt
consolidation company are not worth it.
Regulations about bankruptcy are getting stricter. When talking
to a debt consolidation company representative make sure they tell
you exactly what bankruptcy does. Also, beware of some services
that mask their product as debt elimination, but in fact is bankruptcy.
Bankruptcy is not the solution. Here is some more information about
bankruptcy to help you make your decision.
What is Bankruptcy?
Personal bankruptcy generally is considered the debt management
option of last resort because the results are long-lasting and far-reaching.
A bankruptcy stays on your credit report for 10 years, making it
difficult to acquire credit, buy a home, get life insurance, or
sometimes get a job. However, it is a legal procedure that offers
a fresh start for people who can't satisfy their debts. Individuals
who follow the bankruptcy rules receive a discharge-a court order
that says they do not have to repay certain debts.
There are two primary types of personal bankruptcy: Chapter 13
and Chapter 7. Each must be filed in federal bankruptcy court. The
current fees for seeking bankruptcy relief are $160: a filing fee
of $130 and an administrative fee of $30. Attorney fees are additional.
Chapter 13 allows persons with a steady income to keep property,
like a mortgaged house or a car, that they otherwise might lose.
In Chapter 13, the court approves a repayment plan that allows you
to use your future income to pay off a default during a three-to-five-year
period, rather than surrender any property. After you have made
all payments under the plan, you receive a discharge of your debts.
Known as straight bankruptcy, Chapter 7 involves liquidation of
all assets that are not exempt. Exempt property may include automobiles,
work-related tools and basic household furnishings. Some of your
property may be sold by a court-appointed official-a trustee-or
turned over to your creditors. You can receive a discharge of your
debts through Chapter 7 only once every six years.
Both types of bankruptcy may get rid of unsecured debts and stop
foreclosures, repossessions, garnishments, utility shut-offs, and
debt collection activities. Both also provide exemptions that allow
people to keep certain assets, although exemption amounts vary.
Note that personal bankruptcy usually does not erase child support,
alimony, fines, taxes, and some student loan obligations. And unless
you have an acceptable plan to catch up on your debt under Chapter
13, bankruptcy usually does not allow you to keep property when
your creditor has an unpaid mortgage or lien on it.
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