Bankruptcy has always had a negative stigma about it, and with good reason. Filing for bankruptcy affects your credit report for seven to ten years, beginning when you are discharged. Debt consolidation appears to be the only alternative to bankruptcy for many debtors. Thus, paying attention to the finer details of the consolidation process will help you to choose a way out of debt that does not involve bankruptcy.
Many people put themselves into debt by over-spending in the beginning. Much of the time this is a direct result of credit cards. However, instead of working to pay off these debts, debtors have a habit of moving their debt from one credit card to another until the interest rates have become so high and the debt so unmanageable that they are left with bankruptcy or consolidation as their only options.
Consolidation is certainly the better option if it means that the debt will stop revolving and finally get paid down. However, if you take out a consolidation loan then you will be forced to pay on time and consistently otherwise you will be forced to file for bankruptcy. When considering a consolidation loan, it is in your best interest to secure the loan with possessions in order to lower your interest rates, which will make it easier for you to pay consistently. This does put your possessions at risk, however, if you fail to make a payment. But if you compare the risk involved in securing a loan with the risk of filing bankruptcy, consolidation is clearly the better choice.
Bankruptcy entails signing your assets over to your creditors, which may leave you without anything except those things deemed invaluable by the creditors. In other words, bankruptcy will let you start over, but it will leave you with nothing in the mean time, and it will remain on your credit report for years. This will make it difficult for you to start over again.
Once you have consolidated your debt, you are committed to paying it off. The consolidation programs help to ensure that you keep on track, and do not default elsewhere. If you do fail to make a payment you will only be risking that possession which you have used to secure your loan instead of losing all of your valuable assets.
Looking at the available options, it should not be difficult to see which one will help you out more. Bankruptcy may be a faster process to begin with, but the effects of it are long lasting. On the other hand, consolidation may be a slow and slightly stressful process from the outset, but in the end it could be the only way to get yourself back on top without losing everything that you already have. The type of debt consolidation loan you choose is essential to your success in completing the program without missing any payments or falling further behind, which is why it is important to consider what assets you have that may be used to secure a loan with a lower interest rate, and then begin paying off your debts.
If you're considering filing bankruptcy then make sure to visit http://www.bankruptcy.get-the-info.net, a popular bankruptcy site that provides bankruptcy information, including how to choose a bankruptcy lawyer.
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IS CHAPTER 13 BANKRUPTCY RIGHT FOR YOU?
Chapter 13 Bankruptcy is a financial reorganization option available to all citizens of the United States. However, in order to be eligible to file Chapter 13, any unsecured debts you owe must be less than $307,675 and secured debts must be less than $922,975.
Drastic changes to Chapter 13 Bankruptcy laws have taken place within the past few years. Perhaps one of the most important changes is U.S. Bankruptcy Law U.S.C. 109,111, which requires individuals to obtain credit counseling from an approved credit counseling agency within 180 days prior to filing.
There are many reasons people file bankruptcy. Oftentimes, it stems from an extended period of unemployment or the inability to work due to health issues. Other times, people are forced into bankruptcy due to divorce or the death of their spouse.
Many people facing foreclosure will file Chapter 13 Bankruptcy in an effort to save their home. While filing for bankruptcy can temporarily halt foreclosure proceedings, the individual must continue making mortgage payments if he wants to retain his property.
Also known as Wage Earner's Plan, Chapter 13 allows individuals to retain their possessions and repay their debts over a period of three to five years. Borrowers can reschedule secured debts to extend and lower payments. A Trustee is assigned to handle your financial obligations and distribute payments to creditors. This encourages creditors to be more flexible in their negotiations, as they know they will be repaid.
Individuals can file Chapter 13 Bankruptcy on their own or with the assistance of an attorney. The majority of people prefer to hire an attorney to represent them and ensure all paperwork is properly filed. If an individual cannot afford an attorney, they may be entitled to pro bono legal assistance through the American Bar Association.
The first step of the bankruptcy process begins by filing a petition with the bankruptcy court in the judicial district where the debtor resides. The petition must include a list of assets and liabilities, current income and expenses, proposed repayment plan and proof of credit counseling.
Approximately three to six weeks after the Chapter 13 petition is filed, a creditors meeting will be scheduled. During this meeting, the trustee and creditors are allowed to ask the debtor questions and either accept or reject the proposed repayment plan.
Creditors must file their claims with the court within 90 days of the creditor meeting. Once these terms have been met, a hearing on the debtor's Chapter 13 repayment plan will take place in front of a Bankruptcy Judge.
The judge may either accept or reject the repayment plan or make modifications to it. Once the plan is approved, the debtor must make regular payments to the Trustee until the reorganized debts are paid in full. The debtor is not allowed to take on any new debt without first consulting with the Trustee.
Most new debt requests are denied unless they are for extenuating circumstances. An example of this would be if the debtor needed to replace an automobile or obtain a loan for college tuition or medical care.
Chapter 13 Bankruptcy is a complicated and lengthy process; however, it can significantly improve the debtor's financial situation and help them get back on track. It can keep people on an excruciatingly tight budget, so it is crucial to propose a repayment plan that you can adhere to.
Before making a final decision, it is highly recommended to conduct thorough research via the Internet or by consulting with a qualified bankruptcy attorney. Chapter 13 Bankruptcy manual and forms can be downloaded at U.S. Bankruptcy Courts.
Simon Volkov is a professional Real Estate Note Investor helping individuals who need to liquidate their real estate. Simon offers numerous investment opportunities for serious investors via RSS feed and email subscription. His website provides resources and articles on today's real estate and financial market. Learn more by visiting http://www.SimonVolkov.com
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