Bankruptcy And Your Right To Debt Relief
If you are struggling to keep up with your bills and monthly expenses such as mortgage or rent, car payments, and medical expenses, you have a legal right to debt relief.
Debt Relief And Credit Counseling
Debt relief can come in the form of a debt repayment plan, or consolidation. This can often be done with the assistance of a credit counseling agency or a lender that can offer you a consolidation loan at a better interest rate. In many cases, this can be done for credit card debt. Debt relief can also come in the form of a bankruptcy filing.
Credit counseling agencies can be helpful with debt relief. They can help you find debt solutions by getting an overview of your finances and offering suggestions that could help you find the debt relief you need. With a picture of your finances, the credit counseling agency can determine which types of debt relief may work best for you. In some cases they may suggest debt management tips or strategies, or whether debt settlement or consolidation could help you find debt relief.
Your Financial Overview
For any type of debt relief, whether negotiated through a credit counseling agency or if you negotiate directly with your creditors, you will most likely need to present a financial overview. This will include, but not necessarily limited to, your income, your assets and possessions including and real estate or property that you own.
Debt Consolidation and Debt Settlement
Two options that are available include Debt Consolidation and Debt Settlement.
With debt consolidation, multiple debts are combined into one single loan with one interest rate and one payment due date. The lender or broker offering the debt consolidation will charge a fee for their services, but your monthly total debt payments still should be lower and more manageable.
Debt Settlement involves negotiating with your creditors to reduce the amounts owed. In some cases, you may be allowed to pay a lump sum for a balance owed in a lower amount. Debt settlement can also allow for a reduced balance or reduced payment offering debt relief. Such an agreement may be negotiated on the condition you make all of your payments on time. In some cases, the creditor can collect on the previous amount due, meaning the original balance, if you miss a payment.
Debt settlement and consolidation can both be an effective form of debt relief, but to negotiate either debt settlement or debt consolidation, you may still need a high enough credit score to qualify, or at least qualify for a favorable enough interest rate. This can often be difficult for people already in debt and have already missed payments.
Debt settlement and debt consolidation can sometimes mean that your overdue accounts will be closed. While this may mean losing any available credit in these accounts and making it more difficult to borrow in the short run, but it is also an opportunity to lower your overall level of debt and ultimately improve your credit score with on-time payments.
Debt Relief Through Bankruptcy
Is Bankruptcy the Solution?
If your debt to income ratio is especially high, it's possible that bankruptcy may be suggested as an option. The credit counseling agencies won't necessarily recommend that you file for bankruptcy but can let you know whether you might be a good candidate for a bankruptcy filing. If you are filing for bankruptcy, you will be required to take a credit counseling course. Many of these credit counseling agencies also provide debt relief services.
Immediate Debt Relief When You File For Bankruptcy
If your debt is increasing beyond your ability to continue paying for it, Bankruptcy may be an option.
Bankruptcy and the Automatic Stay
The Automatic Stay Stops All Collection Activity in Their Tracks
Under bankruptcy law, the Automatic Stay provides instant debt relief by barring nearly all creditors when you file for bankruptcy. The Automatic Stay doesn't last forever, but can give you the breathing space to the next steps in your bankruptcy proceedings without having to deal with letters or calls from collection agencies.
The two main forms of consumer bankruptcy are Chapter 7 vs Chapter 13Chapter 7 and Chapter 13. If you are drowning in debt and considering bankruptcy, it could be helpful to know which type might be best for you. Both Chapter 7 and Chapter 13 offer a powerful means of debt relief.
If you don't own a home and are over your head in debt, filing for Chapter 7 Bankruptcy may be your best option for debt relief. If your credit card debt is growing, you possibly have outstanding medical debt, or even behind on your car payments, Chapter 7 can offer a fresh start by discharging all or most of your unsecured debt, usually within one year of your filing.
Chapter 7 Bankruptcy cases are usually finalized, or discharged, within one year of filing. Unsecured debt such as personal loans, credit cards, and even payday loans can be discharged through Chapter 7 Bankruptcy. Chapter 7 Bankruptcy can also eliminate medical debt and outstanding dental bills.
What About My Car?
If you are behind on car payments and feel that you are stuck a with car that is losing value and in need of considerable repair, Chapter 7 allows you to surrender the vehicle and any debt owed for the balance, missed and late payments, or any collection fees. If you think you can afford to keep your car, you can arrange to make up for any back payments owed but the auto lender isn't likely to reduce the balance or interest rate.
If you own a home and are hoping to keep it, Chapter 13 Bankruptcy could help you to keep your house by allowing you to get caught up on your mortgage through a court approved repayment plan. If you are behind on your car payments and wish to keep your car, then you can include any amounts past due in your debt repayment plan.
Keep Your Home
As an immediate form of debt relief, Chapter 13 Bankruptcy can not only prevent your home from going into foreclosure, but it can halt the foreclosure process after it begins. Even if your home has been put up for auction, filing for Bankruptcy will stop the process and prevent any sale of your home and also halt any evictions.
You will still need to provide the Bankruptcy Court with a repayment plan for any overdue mortgage payments. But filing for bankruptcy will offer you debt relief and valuable time to come up with a plan to catch up with your mortgage payments and keep your home. Under Chapter 13 Bankruptcy, repayment plans are overseen by the Bankruptcy Court and will last from three to five years.
The Walker Law Firm is a Debt Relief Agency
If You Are In Debt and it's Getting Worse, Contact Us Today
If you are struggling with debt and it's only getting worse, contact the Walker Law Firm today for the debt relief allowed to you by law! We offer a free consultation to discuss your best options for getting out of debt.