Sunday, September 26, 2021
HomeMust ReadIs It Better To Settle Debt Or File Bankruptcy

Is It Better To Settle Debt Or File Bankruptcy

Pros Of Chapter 13 Bankruptcy

Should I File Bankruptcy? I’m $32,000 in Debt.

Debtors who earn too much to qualify for Chapter 7 may yet score bankruptcy protection under Chapter 13. This means, among other things, calls and other contacts from creditors and collections agencies stop the moment the application is filed. Other plusses include:

  • You get time to pay back your creditors, oftentimes with lower payments than you faced before declaring bankruptcy.
  • Once your plan is complete, creditors who were not repaid in full cannot pressure you into making them whole.
  • Under Chapter 13, a debtor has the length of the plan to catch up on past-due amounts owed on houses, vehicles, or loans secured by collateral. Repossession schemes stop under Chapter 13, and the valuables need not be liquidated as they would in a Chapter 7 filing.
  • Through a Chapter 13, you may be able to renegotiate secured debts such as a car loan and in some cases can pay a lower interest rate and lower car payment.
  • Chapter 13 filers also have the life of their plan to pay overdue income taxes and domestic support obligations such as child support and alimony.
  • Chapter 13 protects the debtors cosigners on personal loans.
  • In a Chapter 13 case, the debtor may be allowed to pay the bankruptcy attorneys fee in an installment plan, rather than in advance.
  • Unlike Chapter 7, which limits the frequency of filing, you may file for a Chapter 13 plan repeatedly.

License Revocation Fines And Jail

First Offense Misdemeanor: minimum $700 fine plus surcharge, not less than 48 consecutive hours in jail OR 48 hours compensatory service work program OR electronically monitored house arrest, 120 days license suspension, drug and/or alcohol assessment and screening and possible education or treatment as required, and will become alcohol restricted driver for 2 years . Possible ignition interlock restriction required as a condition of probation for a time period determined by the courts .Second Offense Misdemeanor: minimum $800 fine plus surcharge, minimum 240 hours in jail OR 240 hours compensatory service work program OR electronically monitored house arrest, 2 years license revocation, drug and/or alcohol assessment and screening and possible education or treatment as required, and will become alcohol restricted driver for 10 years . Ignition interlock restriction required as a condition of probation for a time period determined by the courts .Third and Subsequent Offense Felony: minimum $1,500 fine plus surcharge, up to 5 years in jail, 2 years license revocation, ignition interlock restriction required as a condition of probation for a time period determined by the courts , drug and/or alcohol assessment and screening, mandatory 240 hours inpatient treatment and aftercare, and will become alcohol restricted driver for 10 years .

File Bankruptcy Or Try To Settle Debts

File bankruptcy or try to settle debts?

i live with two senior citizens who are both on SSI and who depend on me. Would you file for bankruptcy if you are having problems making ends meet. What would you cancel: sat service, phone with internet, cell phone plus we also have house insurance, electricity, water and sewer also trash. i am making at least 1,000.00 per month would you file for bankruptcy knowing it would be the best thing to do

Answer : I might suggest you to visit this site where you can get from the best companies: .

Related :

i live with two senior citizens who are both on SSI and who depend on me. Would you file for bankruptcy if you are having problems making ends meet. What would you cancel: sat service, phone with internet, cell phone plus we also have house insurance, electricity, water and sewer also trash. i am making at least 1,000.00 per month would you file for bankruptcy knowing it would be the best thing to do

i live with two senior citizens who are both on SSI and who depend on me. Would you file for bankruptcy if you are having problems making ends meet. What would you cancel: sat service, phone with internet, cell phone plus we also have house insurance, electricity, water and sewer also trash. i am making at least 1,000.00 per month would you file for bankruptcy knowing it would be the best thing to do

Also Check: Do You Lose Your House In Bankruptcy

Bankruptcy Is Often Better Than Debt Consolidation/settlement

When people first realize that they;may be in financial trouble;they either ignore the warning signs, or consider many options for fixing it.

A common thing is for people to panic and then attempt to work with a debt consolidation or debt settlement company.

This sounds like a good idea in theory, doesnt it?

However, in practice filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota is often much better, for several reasons.

Pros Of Chapter 7 Bankruptcy

Debt settlement or bankruptcy: Which option is better for ...

The feeling of financial relief is one positive with Chapter 7 bankruptcy, but not the only one:

  • Successfully completed, Chapter 7 is a clean way to achieve precisely what bankruptcy laws were designed to do: give the bankrupt a fresh start.
  • Chapter 7 is fairly quick, usually taking between three and six months to complete.
  • Filers get immediate relief from debt collectors. Calls and other contacts cease.
  • You will not have to pay into a lengthy repayment plan.
  • Your wages will not be garnished.
  • If your credit has gone seriously south like below 600 your credit score actually will improve substantially in a matter of months.
  • Once your bankruptcy is discharged, you can begin to re-establish credit worthiness by using a secured credit card and/or being added as a user to someone elses credit account, and sticking to a budget.
  • You can prevent your utilities from being shut off for nonpayment.
  • You can avoid a foreclosure on your mortgaged home, or stop a tax deed sale.
  • Bankruptcys immediate stay provision means you may be able to prevent your car from being repossessed. You may even be able to restructure your car loan in some cases.

Don’t Miss: What Is Epiq Bankruptcy Solutions Llc

If Youre Thinking Of Enrolling In A Debt Settlement Or Debt Consolidation Program You Should First Talk To One Of Our San Jose Bankruptcy Attorneys

The debt settlement industry advertises a lot. And they try to scare people away from the protections that consumer bankruptcy law provides by making filing for bankruptcy sound as though it were shameful or will ruin your credit for years to come.

The fact is debt settlement programs fail about two-thirds of the time according to the debt settlement industry itself. You dont have to take my word for it. The National Association of Consumer Bankruptcy Attorneys has published a white paper on the debt settlement trap citing the Better Business Bureau, statistics provided to state attorneys general, as well as reports published by the Federal Trade Commission, and the U.S. Government Accountability Office. Read more here.

Considering Debt Settlement Or Bankruptcy

Both bankruptcy and debt settlement are options for people who cant get out of debt by budgeting, cant get a debt consolidation loan, and dont qualify for a debt management plan. In other words, consumers who cannot afford to repay their debts in full. In this case you are left with two common debt relief options declaring personal bankruptcy or debt settlement. Below Ill help you learn about the pros and cons of each and how to know you are dealing with a trusted professional.

Also Check: How Many Bankruptcies Has Donald Trump

Debt Settlement Has Risks

Although a debt settlement company may be able to settle one or more of your debts, consider the risks associated with these programs before you sign up:

1. These programs often require that you deposit money in a special savings account for 36 months or more before all your debts will be settled. Many people have trouble making these payments long enough to get all of their debts settled. They drop out the programs as a result. Before you sign up for a debt settlement program, review your budget carefully to make sure you are financially capable of setting aside the required monthly amounts for the full length of the program.

2. Your creditors have no obligation to agree to negotiate a settlement of the amount you owe. So there is a chance that your debt settlement company will not be able to settle some of your debts even if you set aside the monthly amounts the program requires. Debt settlement companies also often try to negotiate smaller debts first, leaving interest and fees on large debts to grow.

What A Bankruptcy Accomplishes

Bankruptcy vs. Debt Settlement: Which Makes the Most Sense for You?

There are different types of bankruptcies in Oklahoma. If you file Chapter 7 bankruptcy , and succeed in completing that process, you might rid yourself of most of your debts via liquidating certain of your assets. There are some types of debt that you will not be able to eliminate through Chapter 7 bankruptcy though. For instance, student loans and child support are two examples of debts that you must continue to pay off even if you file for bankruptcy. However, for many individuals, Chapter 7 bankruptcy can lead to a fresh financial start.

Not everyone can file Chapter 7 bankruptcy, and not everyone will want to choose this form of relief even if they are eligible. Chapter 13 bankruptcy allows individuals to reorganize their debts while still making certain payments. Chapter 13 bankruptcy might be an option for someone who does not wish to lose certain assets. This plan will allow debtors who make a reliable income to pay a certain amount each month that the court will distribute between creditors. At the end of the bankruptcy, the remaining debts dissolve.

There are notable drawbacks to filing for bankruptcy, most importantly being the harsh impact on your credit score for up to ten years. However, for many individuals, this option will allow them to move forward with a healthier financial situation.

Read Also: How To Get A Credit Card After Filing Bankruptcy

Understand How Chapter 7 Bankruptcy Works

As stated above, the main difference between Chapter 7 and Chapter 13 bankruptcies is that all your debt is wiped out in Chapter 7 regardless of what you owe. For reference, student loans are generally not discharged in either type of bankruptcy. ;

To qualify for Chapter 7, you must meet income guidelines based on means testing. This information is determined by the Census Bureau and the Internal Revenue Service. These income guidelines are based on the income based on your family size and the state where you reside. For details, the most recent Census Bureau Median Family Income By Family Size for on or after May 1, 2020 and beyond can be found here. If you earn more than the median, the next step would be to determine whether you have enough left over to repay some of your debt.

A few points to note: ;

  • The higher your disposable income, the more likely you wouldnt qualify for a Chapter 7 bankruptcy.;
  • There can be exempt assets that are state-specific. The Bankruptcy Site provides a comprehensive list of those exemptions by state here.
  • Only bankruptcy filers who have significant consumer debts need to take the means test.;

Is Chapter 7 Better Than Other Debt Relief Options

We mentioned a couple of ways that Chapter 7 would be better than other debt relief optionsÂ; above. Even though some people consider bankruptcy more of a last resort, you should not think of it that way. Ways that filing Chapter 7 may be the best debt relief option for you include:

  • Usually takes less than 6 months. Chapter 7 can eliminate most of your debts within four to six months without any payments to the creditors.

  • The creditor canât continue collection efforts after you file your Chapter 7 petition without court approval. This means all the phone calls have to stop!

  • Stop collections and harassment. Creditors are not permitted to collect discharged debts. A creditor may face severe penalties for violating the discharge order.

  • Stops wage garnishment. A Chapter 7 bankruptcy case stops wage garnishment, debt collection lawsuits, and other forms of debt collection.

  • Erases deficiency judgments. If you choose to surrender your car or house because you can’t afford the payments, a creditor can’t obtain a deficiency judgment.

  • Doesnât have to be expensive. Your costs for filing a Chapter 7 case may be very low if youâre eligible to use Upsolveâs free bankruptcy filing tool and file bankruptcy without a lawyer.

Don’t Miss: What Can They Take In Bankruptcy

Crucial Differences Between Debt Settlement And Bankruptcy

If youre having trouble paying off your debts, then you might hear about an option called debt settlement. Some debt settlement companies, attorneys, and even people you know may tell you its a much better option than bankruptcy. But what is it, exactly? And what are the key differences between filing for bankruptcy and undergoing debt settlement?

Why People Choose Between Debt Relief And Bankruptcy

Is It Better To Pay Off Debt Or File Bankruptcy?

When a person canât pay their debts, creditors can become extremely demanding in their attempts to collect debts. In some cases, debt collectors may harass individuals for payment of debts. Of course, if you don’t have enough income to make all of your monthly payments then what the debt collector that is calling you may suggest, your financial situation may simply make a payment plan to get back on track impossible.

Some debt collectors and creditors may push you toward a specific debt relief option. Keep in mind, though, that their recommended debt relief option may not be in your best interest , but it could be in the best interest of the creditor.

Before you decide to use any debt relief program, you need to carefully review all of your options to get out of debt. Some debt settlement programs could cause you to get into additional debt problems if you are not careful.

You should only make a decision about how to get out of debt after weighing the pros and cons of each debt relief option.

Also Check: What Does Declaring Bankruptcy Do For You

Beware Of Debt Settlement Scams

Some companies offering debt settlement programs may engage in deception and fail to deliver on the promises they make for example, promises or guarantees to settle all your credit card debts for, say, 30 to 60 percent of the amount you owe. Other companies may try to collect their own fees from you before they have settled any of your debts a practice prohibited under the FTCs Telemarketing Sales Rule for companies engaged in telemarketing these services. Some fail to explain the risks associated with their programs: for example, that many consumers drop out without settling their debts, that consumers credit reports may suffer, or that debt collectors may continue to call you.

Avoid doing business with any company that promises to settle your debt if the company:

  • charges any fees before it settles your debts
  • touts a “new government program” to bail out personal credit card debt
  • guarantees it can make your unsecured debt go away
  • tells you to stop communicating with your creditors, but doesnt explain the serious consequences ;
  • tells you it can stop all debt collection calls and lawsuits
  • guarantees that your unsecured debts can be paid off for pennies on the dollar

Types Of Loan Modification Programs

Some lenders and servicers offer their own loan modification programs, and the changes they make to your terms may be either temporary or permanent. If your lender or servicer doesnt have a program of its own, ask if you are eligible for any other assistance programs that can help you modify or even refinance your mortgage. The federal government previously offered the Home Affordable Modification Program, but it expired at the end of 2016. Now, Fannie Mae and Freddie Mac have a foreclosure-prevention program, called the Flex Modification program, which went into effect Oct. 1, 2017. If your mortgage is owned or guaranteed by either Fannie or Freddie, you may be eligible for this program. The federal Home Affordable Refinance Program, or HARP, helped underwater homeowners refinance into a more affordable mortgage. HARP has also expired. Fannie Maes High Loan-to-Value Refinance Option and Freddie Macs Enhanced Relief Refinance replaced HARP in 2019.

Recommended Reading: What Is Bankruptcy And Insolvency Act

Debt Settlement Vs Credit Counseling

Credit counseling is a free or inexpensive service provided by nonprofits and government agencies. Interestingly, these services are often partly funded by credit card companies.;By enrolling in a debt management plan with a , you may receive an interest rate reduction on your balances and a waiver of penalty fees.

Those concessions may or may not be sufficient to help you pay down your debt considerably faster, and you may or may not be able to afford the new required monthly payments.;In addition, you may not qualify for an interest rate reduction, even if you have a significant financial hardship.

However, because you wont have to default on your debt, your credit score may suffer less. Also, credit counseling may offer additional financial assistance that can help you avoid similar problems in the future, such as budget development and financial counseling, and referrals to low-cost services and assistance programs to help you reduce your expenses.;Fox says a credible debt settlement company will also work with clients to help them learn how to budget, use credit responsibly, and live within their means.

So how do you know which to choose if you dont want to pursue bankruptcy? Credit counseling is best suited for consumers who have $2,500 to $15,000 worth of unsecured debt and simply need a reduction in their interest rate to make the monthly payments manageable, Fox says.

RELATED ARTICLES

Most Popular