Is Credit Card Debt Settlement The Solution For You?
Understanding how bad of an effect bankruptcy has will save your financial future!
Most debtors who have a huge amount of debt that they are failing to pay off, at one time or another have thought about the option of going through a bankruptcy proceeding. In this article I am going to give you a couple very serious reasons why you should avoid bankruptcy at all costs, if you can. The majority of people in debt don't recognize the deep negative blow a bankruptcy can have.
1. Filing for bankruptcy has an enormously negative effect on your credit and becomes a lifetime public record!
Bankruptcy is one of the worst derogatory remarks that can be placed on a credit history. Thus making any additional credit you attempt to get very hard, and if you do obtain credit it usually comes accompanied with a extremely high interest rate. Additionally, it will stay on your credit history for up to 7-10 years. Even once it is removed from your credit history it stays a public record for the remainder of your life. So whenever you apply for new credit at any point in the future, if asked the question whether you have ever gone through a bankruptcy proceeding to avoid breaking the law you must answer yes.
2. New Bankruptcy changeover in 2005!
In 2005, our government approved a piece of legislation which makes anybody filing for a Chapter 7 bankruptcy proceeding, which will wipe the table clean of all your debts much harder. Basically if you have an income producing job and a home than most assuredly you will go into a review to determine if you should go through consumer credit counseling first for at the minimum 6 months. According to NFCC close to 80% of people in debt who apply can not abide by the strict rules set from them to finish the program thus tossing them back into the bankruptcy filing. That's when Chapter 13 comes into light which is a form of personal bankruptcy in which the court system will decide how much you will pay back each creditor you list based on your budget.
3. The court system will control your income with a Chapter 13 Proceeding!
Before the new law was passed in 2005 many debtors that would have been able to claim Chapter 7, were now made to go Chapter 13 in it's place. Chapter 13 requires that you review with the judge and show to them all of your finances. You must show all streams of income and assets. The court will go over your expenses compared to your income and then determine how much money you will have to pay each month. You have pretty much no say in this process. If you have liquid assets available they can make you sell them, within State law, to pay down your debt. There are timed hearings each year and if your income increases you must report this to the judge, this could increase the amount you pay back. If you have multiple family vehicles you might have to sell one to pay down the debt. They basically tell you what you can do with your money. If you have the premium cable you will need to cut down to standard cable, if you consume steaks every night you will need to cut back to hamburgers. This can be a extremely painful and embarrassing process.
These are all seriously unattractive things that debtors should be made aware of prior to dealing with a bankruptcy lawyer. The majority of lawyers will not disclose these negative facts of claiming bankruptcy. Bankruptcy is there for a purpose and for some people they have no other option available to them and must file for a bankruptcy proceeding, however a lot people go bankrupt unnecessarily. A very nice substitute option to bankruptcy is debt settlement. With debt settlement in many cases you will save tremendously more money than you would have with a Chapter 13, besides you will be out of debt much quicker, and not go through the many negative consequences of filing for bankruptcy.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in debt relief.
1. Filing for bankruptcy has an enormously negative effect on your credit and becomes a lifetime public record!
Bankruptcy is one of the worst derogatory remarks that can be placed on a credit history. Thus making any additional credit you attempt to get very hard, and if you do obtain credit it usually comes accompanied with a extremely high interest rate. Additionally, it will stay on your credit history for up to 7-10 years. Even once it is removed from your credit history it stays a public record for the remainder of your life. So whenever you apply for new credit at any point in the future, if asked the question whether you have ever gone through a bankruptcy proceeding to avoid breaking the law you must answer yes.
2. New Bankruptcy changeover in 2005!
In 2005, our government approved a piece of legislation which makes anybody filing for a Chapter 7 bankruptcy proceeding, which will wipe the table clean of all your debts much harder. Basically if you have an income producing job and a home than most assuredly you will go into a review to determine if you should go through consumer credit counseling first for at the minimum 6 months. According to NFCC close to 80% of people in debt who apply can not abide by the strict rules set from them to finish the program thus tossing them back into the bankruptcy filing. That's when Chapter 13 comes into light which is a form of personal bankruptcy in which the court system will decide how much you will pay back each creditor you list based on your budget.
3. The court system will control your income with a Chapter 13 Proceeding!
Before the new law was passed in 2005 many debtors that would have been able to claim Chapter 7, were now made to go Chapter 13 in it's place. Chapter 13 requires that you review with the judge and show to them all of your finances. You must show all streams of income and assets. The court will go over your expenses compared to your income and then determine how much money you will have to pay each month. You have pretty much no say in this process. If you have liquid assets available they can make you sell them, within State law, to pay down your debt. There are timed hearings each year and if your income increases you must report this to the judge, this could increase the amount you pay back. If you have multiple family vehicles you might have to sell one to pay down the debt. They basically tell you what you can do with your money. If you have the premium cable you will need to cut down to standard cable, if you consume steaks every night you will need to cut back to hamburgers. This can be a extremely painful and embarrassing process.
These are all seriously unattractive things that debtors should be made aware of prior to dealing with a bankruptcy lawyer. The majority of lawyers will not disclose these negative facts of claiming bankruptcy. Bankruptcy is there for a purpose and for some people they have no other option available to them and must file for a bankruptcy proceeding, however a lot people go bankrupt unnecessarily. A very nice substitute option to bankruptcy is debt settlement. With debt settlement in many cases you will save tremendously more money than you would have with a Chapter 13, besides you will be out of debt much quicker, and not go through the many negative consequences of filing for bankruptcy.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in debt relief.
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