Mar 09 2010
Debt As Opposed To Bankruptcy
With consumer debt at an all time high, owing a debt can seem very overwhelming. A lot of people have looked into the internet and have seen advertisements claiming debt relief as a quick fix. Alluring as these ads may seem, it is important to be on the lookout for the validity of the claim.
While many of these promise a quick fix, that quick fix may be bankruptcy. And yes, bankruptcy is one way to address your financial issues, but in most cases it should be seen as a last resort. The fact that you claim bankruptcy remains on your credit report for ten years which means that your chances of getting credit, jobs, a place of residence, or insurance are significantly lowered.
It is always wise to think over other options before deciding to file for bankruptcy. Talk with your creditors. Oftentimes, a re-payment plan can be chisled out that is modified or can be paid in installments. Credit counseling services can work with you and your creditors to work out debt repayment plans.
If you are considering a second mortgage, make sure that it is within your means. These loans require your house as collateral. Bankruptcy has the capacity to stop foreclosures, debt collection activities and it may get rid of unsecured debts. Exemptions are given that permit you keep certain assets. However, personal bankruptcy does not usually eliminate child support, fines, taxes, alimony and in some cases student loans.
Usually it will not let you hold on to your property if your creditor has a mortgage or security lien that hasn’t been paid. A relatively recent change in bankruptcy laws makes certain hurdles that you must get through before you can even file for it, no matter what type of bankruptcy. First, you have to get credit counseling from an organization approved by the government within six months before filling.
Keep in mind that in some cases you must pass a test that requires you to confirm that your income level doesn’t exceed a certain amount.
Mallory McGuinness works for a collections agency that works with a debt collection lawyer. She also composes articles on business and finance, consumer spending and collections agencies.
