When it comes to such important issues, it is a good idea to use the advice of those who know about the subject. Let’s see what the Federal Trade Commission suggests on this particular topic.
The main thing that the FTC suggests is that you postpone the decision of filing for bankruptcy till after you have analyzed all the other alternatives out there. This is due to the fact that bankruptcy should be considered a last resort and the FTC strongly suggests against taking that path unless absolutely necessary because the detriment that it implies to your financial and credit situations is overwhelming.
Three Options To Obtain Debt Relief
The first alternative that the FTC suggests as means to obtain debt relief, is to talk with your creditors. Sometimes you are entitled to change the terms on your repayment program by the very contract you signed or due to the law. And even if you are not, a lender will certainly prefer to negotiate a new repayment program than to pay the costly charges of collector agencies or the legal costs of a court case.
If you are not comfortable with the above task, you can hire a credit counseling agency. These agencies will negotiate with your creditors for you and they’ll put their expertise to work so as to get for you new repayment programs, lower interest rates and sometimes even cuts on your debt interests or principal. Some of these organizations are non-profit and charge little or no money but even those that are not, won’t charge you high fees and will save you a lot of money.
The FTC suggests, as another option, to consider a second mortgage or home equity line of credit. These two alternatives are financial products based on equity that provide a fair amount of money at very reasonable rates and with a flexible repayment program. However, the FTC also states that these options should be considered carefully because the loans and lines of credit based on equity are secured with your property and thus, you risk repossession if you fail to repay the money.
Costs And Other Considerations About Bankruptcy
If the above alternatives won’t do any good for you, then, bankruptcy may be the only choice. Bear in mind however, that bankruptcy is not a simple or inexpensive process. There are two types of bankruptcies: Chapter 13 and Chapter 7. The filing fees are around $300 dollars, chapter 13 being slightly cheaper. Chapter 13 provides you with some benefits like the possibility of keeping a mortgaged property and work out a repayment plan to cancel your debts with advantageous terms without having to surrender all of your assets.
Chapter 7, on the other side, is a straight bankruptcy where all your assets are sold in order to repay your debts and only after all your debts are canceled the remaining (if any) is handed over to you and your bankruptcy is discharged. Bear in mind also that not all debt is erased with a bankruptcy process and you won’t be able to keep all your assets; not even with Chapter 13.
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Frequently Asked Questions
My husband and I have initiated a Chapter 7 ...
By: kathi | 09-07-2008
My husband and I have initiated a Chapter 7 because we owe more than$120,000 in unsecured debt. After we pay the attorney fee, this case will be filed. In the meantime, we have gotten behind on our mortgage by 3 months. We want to keep the house, and the car. Is it possible to file both Chapter 7 to eliminate the credit card debt, etc., and file a Chapter 7 to keep the house and car? I know that a Chapter 13 can be converted to a Chapter 7, but can they be done simultaneously/ Or, could we do the Chapter 7 first and then a Chapter 13 to save the house?
Bankrutpcy completed. What do I do now?
By: Audrey | 07-07-2008
I have 1 more payment and I will have my chapter 13 bankrupty paid. What steps do I need to take to make sure everything is reported and what are the next steps to rebuilding my credit? It has been a very long five years and I want to make sure I do everything I need to do to be back on the right track.
Adversary Proceeding Precedures
By: deana2marie | 25-06-2008
In what order are documents to be filed in any adversary proceeding in Southern Nevada and what are the title of the documents? What documents should be attached as exhibits?
Chapter 13 bankruptcy attorney
By: susan williams | 02-06-2008
I am seeking a good chapter 13 bankruptcy attorney in west palm beach. Can anyone recommend anyone?
Can someone explain chapter 13 terminology for me?
By: SuSu | 26-05-2008
Hi!I am wondering if anyone can explain to me the information i am getting from the Nat'l Data Center Chapter 13 website? We filed chapter 13 3yrs ago and i cant figure out how much more we actually owe on this. How do i know what was actually filed and claimed and what wasnt?It doesnt explain it well on this site. It tells you where all the money goes you send in every month. But it doesnt tell you how much more one is due.How do i figure that out?Thanks
California Bankruptcy Law
By: Nurse | 17-05-2008
In the state of California, how many years must you wait before the filing is erased from your credit record?
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