Overwhelmed in debt - Bankruptcy may be an option

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Online Debt Consolidation Loans
Debts are a result of loans that one had taken on several occasions to satisfy one or the other personal need. Borrowing loans is thought to be an easier way to accomplish desires. But, at times it may become tough for you to handle debts. Remembering whom to pay, how much and when is a difficult task. Online debt consolidation loan in such circumstances can work as an effective solution to secure... Read debt consolidation article



Credit card debt - Exploring different options
Do you have credit card debt? Well if you do you are not alone, as there have been many studies on this problematic issue for America. It appears that the average person in the population has $8,000 to $10,000 in credit card debt, depending on which survey you read and it is a very important issue for our Nation. This is caused by a couple of things such as the difference between living... Read debt consolidation article



Overwhelmed in debt - Bankruptcy may be an option
Things are bad, really bad. They have to be for you to be considering bankruptcy. It's true that bankruptcy can wipe away your debts, or most of them anyway. Taxes are exempt from bankruptcy protection. You can declare bankruptcy, but if a substantial portion of your outstanding debt is back taxes, interest and penalties, you are not going to escape. If, however, most of your debt is credit card debt, mortgage, car loans and other consumer or business debt, there is a chance you may successfully escape most or all of your financial obligations.

Even so, is bankruptcy the best alternative for you? If you do declare bankruptcy, which type of bankruptcy should you consider? How will the new federal bankruptcy reform statute that goes into effect on October 17, 2005 affect you. In most cases you should be seeking qualified legal counsel for the answers to these questions. The devil, as they say, is in the details. You don't want to make a small mistake when declaring bankruptcy, only to lose some of the protection to which you are entitled. You only want to do this once. It will for follow you around for 10 years in the case of a Chapter 7 bankruptcy. Make sure your attorney is a bankruptcy specialist. Just using your uncle Joe who happens to be a lawyer may be a big mistake.

There are two types of bankruptcy for private individuals, chapter 7 and chapter 13. With Chapter 7 you can generally escape from all debt with a few exceptions such as state and federal taxes. You can keep certain exempt property as well. There is a federal exemption list Most states have an exemption list too. Most states require you use the state list but some allow you to choose from either the state or federal list. Property not on the list is sold to satisfy pay creditors.

Chapter 13 bankruptcy will require renegotiation and repayment of your debts. You will first file a petition for bankruptcy with the court and a trustee will be appointed. If your income exceeds your expenses, you will usually be required by the court to use the Chapter 13 option.

You will want to examine which alternative is the correct one for you. In fact, there are other alternatives to serious debt problems besides bankruptcy. One of these is a debt consolidation loan. Debt consolidation loans are growing in popularity due to many factors including the rise in homeowner's equity, record low interest rates, and a dramatic increase in the level of consumer debt. This option can be much more attractive than bankruptcy. If you can keep from declaring bankruptcy, you will not have the social stigma and long term credit issues to deal with. There are literally hundreds of debt consolidation options available from many different lenders.

A debt consolidation loan is basically just a home equity loan used to pay off your higher interest debts. Because the loan is secured by real estate or some other valuable collateral, you get a substantially lower interest rate than can be had for most unsecured debts, such as credit cards. This contributes to a lower payment. In addition the term of the loan is usually longer than a credit card, contributing further to lowering the monthly payment. The decrease in monthly outflow can be just what the doctor ordered and can prevent bankruptcy. Be advised however, if the conditions that caused your monthly payments to rise are not corrected, you risk ending up facing bad credit problems again.

There are downsides to debt consolidation loans as well. First, you could lose your home. Also, you use up the equity in your home so you won't have to bail you out a second time.

Another alternative to bankruptcy is credit counseling. With this option, a credit counseling firm works with you and your creditors to arrange lower payments, make your debts current (called re-aging), and even possibly forgo a portion of your debt. This is an attractive option for many. It is being mandated by the new federal bankruptcy legislation as a step before bankruptcy in many occasions.

You may have to declare bankruptcy. It may even be the best course of action for you. However, bankruptcy may not be the best way to go and there are other alternatives. Do careful research on bankruptcy and the alternatives and evaluate your personal situation carefully before you make your decision.

Steve writes about a multitude of business and finance topics. For important information that could save you thousands of dollars and more, see The Debt and Loan Consolidation Guide.

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A checklist for credit counseling services

There are credit counseling agencies that rescue people from the deepest financial holes. There are also credit counseling agencies that just shovel in more dirt. How do you tell them apart? by Joel Walsh

Signs of a Reliable Credit Counseling Agency __Better Business Bureau Membership The service's website should have a BBB logo and a link to their record on the Better Business Bureau website. Click through the link to check that there are no unresolved complaints against them. Many people only think about the Better Business Bureau after they've been cheated, but by then there's not much you can do. Working with a credit counseling agency that is a member of the Better Business Bureau means that you can go to them to help mediate any dispute you might have with the service provider.

__Accreditation Reputable credit counseling services will be accredited by an independent nonprofit, just as many schools are. One such accreditation body is the National Institute for Financial Counseling Education.

__Fees A good credit counseling agency will charge a small, reasonable monthly fee, usually around $30. Some also charge a fee upfront, though this fee should be reasonable (around $50 tops). It may be possible to get a hardship waiver of these fees if you truly do not have the $30-50.

__Clear Application The application must clearly say what the fees to be paid are, what the services to be provided are, and in what timeframe all of this will be provided.

__Reasonable Promises Run far, far away from any organization that proposes to "wipe out" your debt for you, rather than simply helping you to repay the debt. Short of your creditors just deciding to forget about the debt (unlikely), there is no way to erase debt-even bankruptcy leaves a huge mark on your credit report for ten years.

True, your car may not go missing from your driveway if you stop paying unsecured debt (i.e., debt that is not "secured" with collateral, like most credit cards, unlike most auto loans). But you are still legally obligated to pay the debt, and the possibility of being taken to court will loom over you. You will likely be unable to get even "bad credit" financing if you still have debts in collections-good luck buying a car or house.

Not Necessarily Signs of a Reliable Agency XX Nonprofit Status Nonprofit status is essentially a tax designation, not a government endorsement of a group's mission. There are plenty of near-fraudulent credit counseling agencies that are registered nonprofits.

XX Respectable Name Any group can put words like "National," "Alliance," "Assistance," and other trust-inspiring words in their name. But a name is just a name. Make sure to check any organization against the list above to make sure they're reliable. Also try searching for the group's name on a search engine. Don't just look for a lack of negative reports-that might just mean the group changed names recently. Instead, look for positive reviews from real people, and preferably mention on reputable third-party websites, such as news sites.

Ready to find a credit counseling agency? You're in the right place: the web is full of credit counseling agencies. Just use the checklist above, and you'll have no trouble separating the saints from the scams.

Joel Walsh has written on credit counseling: http://www.debtguru.com [Publish this article on your website! Requirement: live link for above URL/web address w/ link text/anchor text: "credit counseling" OR leave this bracketed message intact. Permalink: http://debtguru.com/articles/credit-counseling-services-checklist.html]


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Overwhelmed in debt - Bankruptcy may be an option
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