Consumers Have Several Options To Eliminate Debt
A lowered economic situation and the explosion in the real estate market bubble has forced borrowers to the breaking point so they aren?t able to make the payments on their credit cards and consumer debt. For people in this situation trying to find a way to fix their problem, they often decide the only thing they can do is decide between assorted debt relief possibilities. These possibilities include counseling, consolidation, bankruptcy, and settlement. Out of these, debt settlement and filing for bankruptcy are what most people chose because of the pros in regards to getting rid of their existing payments and the amount they can reduce their existing debt.
For clients, the two most used bankruptcy types are Chapters 7 and 13. Out of these, Chapter 7 gives users a more superior outcome and it still gets rid of most, if not all, of the existing debt. Before the bankruptcy code was overhauled in 2005, Chapter 7 bankruptcy was very popular due to that very reason. After that, a court now makes the decision as to which type of bankruptcy is the best for the customer depending on the outcome of a means test, which must be done prior to getting a bankruptcy.
A means test is basically something that evaluates how much money a filer makes and what kind of expenses he has. This is then measured up next to debt redemption standards decided by IRS regulations. Based on these regulations, if the filer doesn?t meet up to the income guidelines, he is allowed to file for bankruptcy under the auspices of chapter 7. But, it takes meeting very strict guidelines to get a chapter 7. If the means test says the person is able to put as low as $100 to pay off the bills, then the person will be given the option of filing for a chapter 13 bankruptcy. In both scenarios, the borrowers must pay for and receive credit counseling and budget analysis. Even though Chapter 13 allows a bit of relief on a person?s monthly bills, it?s not as generous to consumers as Chapter 7 and has several disadvantages that make a lot of borrowers decide they don?t want to go with this method. The main negative of a Chapter 13 is that after the terms of the filing are set, the borrower?s finances may be ruled over by a trustee of the court. Most people don?t like to have an outsider involved with their finances all the time, so this makes getting a Chapter 13 very unsatisfactory and usually the borrower decides to try debt settlement instead.
Debt settlement, also called debt negotiation, is a somewhat new and hard line way of debt relief that gives a lot of advantages over counseling, consolidation, and bankruptcy. First, the benefit the borrower sees immediately is that their payments are about half when all their bills are put into a settlement compared to their current payments. The types of credit accounts that you can place into a settlement are credit cards, department store accounts, unpaid utilities, doctor bills, and additional kinds of unsecured debt. Additional pros of this method are: If you get your debts settled, you can stop your salary from being attached or garnished - If you let your creditors know you?re trying to settle your bills with this procedure, they will be assured they will get at least some of the money you owe them. Because of this, they aren?t as likely to sue you while the settlement process is ongoing. Debt elimination ? Existing amounts can go down by between 40 to 70%, depending on your account holder. Most of the time, the combined accounts in a settlement get taken down by 50%.
Settlement will generally result in an overall debt reduction of fifty percent, but it can climb as high as almost three-fourths of your total debt in exceptional circumstances. Combined with the reduction in monthly payments, this results in less financial pressure, allowing you to pay things back and get back to zero more quickly for a fresh start. Most settlement payment processes will run for no longer than four years, but within that time period are reasonably flexible according to the needs of the debtor. This may seem like an extremely short amount of time for large loans such as mortgages, but the loan and payment reductions allow this kind of time limit to be practical.
Debt elimination programs can reduce outstanding balances by 40 to 70%, depending on the specific creditor. In general the average account included in a settlement will be reduced by 50%. The process provides added security for assets that represent a security interest. By reducing payments and eliminating a major portion of unsecured debt relieves pressure on secured assets. Debt settlement is often combined with mortgage loan modifications to help homeowners reduce their total payments toward debt and get for new mortgage terms. Most debt elimination programs terminate within 48 months, the same account with minimum payment could take over 20 years to payoff. The settlement of accounts allows for borrowers to begin the process of re-building their credit scores faster than bankruptcy which can remain on a consumer?s credit report for up to ten years.
Debt settlement and negotiation is becoming an increasing accepted manner for consumers to address the issues of debt overload without filing for bankruptcy. Consumers still need to review all available forms of debt relief before making a decision. One of the best ways to sort through the available options is to contact an attorney with experience in consumer debt relief to decide which option is in the best interests of the consumer. Getting on the road to financial recovery is simple the matter of taking that first step. - 23159
For clients, the two most used bankruptcy types are Chapters 7 and 13. Out of these, Chapter 7 gives users a more superior outcome and it still gets rid of most, if not all, of the existing debt. Before the bankruptcy code was overhauled in 2005, Chapter 7 bankruptcy was very popular due to that very reason. After that, a court now makes the decision as to which type of bankruptcy is the best for the customer depending on the outcome of a means test, which must be done prior to getting a bankruptcy.
A means test is basically something that evaluates how much money a filer makes and what kind of expenses he has. This is then measured up next to debt redemption standards decided by IRS regulations. Based on these regulations, if the filer doesn?t meet up to the income guidelines, he is allowed to file for bankruptcy under the auspices of chapter 7. But, it takes meeting very strict guidelines to get a chapter 7. If the means test says the person is able to put as low as $100 to pay off the bills, then the person will be given the option of filing for a chapter 13 bankruptcy. In both scenarios, the borrowers must pay for and receive credit counseling and budget analysis. Even though Chapter 13 allows a bit of relief on a person?s monthly bills, it?s not as generous to consumers as Chapter 7 and has several disadvantages that make a lot of borrowers decide they don?t want to go with this method. The main negative of a Chapter 13 is that after the terms of the filing are set, the borrower?s finances may be ruled over by a trustee of the court. Most people don?t like to have an outsider involved with their finances all the time, so this makes getting a Chapter 13 very unsatisfactory and usually the borrower decides to try debt settlement instead.
Debt settlement, also called debt negotiation, is a somewhat new and hard line way of debt relief that gives a lot of advantages over counseling, consolidation, and bankruptcy. First, the benefit the borrower sees immediately is that their payments are about half when all their bills are put into a settlement compared to their current payments. The types of credit accounts that you can place into a settlement are credit cards, department store accounts, unpaid utilities, doctor bills, and additional kinds of unsecured debt. Additional pros of this method are: If you get your debts settled, you can stop your salary from being attached or garnished - If you let your creditors know you?re trying to settle your bills with this procedure, they will be assured they will get at least some of the money you owe them. Because of this, they aren?t as likely to sue you while the settlement process is ongoing. Debt elimination ? Existing amounts can go down by between 40 to 70%, depending on your account holder. Most of the time, the combined accounts in a settlement get taken down by 50%.
Settlement will generally result in an overall debt reduction of fifty percent, but it can climb as high as almost three-fourths of your total debt in exceptional circumstances. Combined with the reduction in monthly payments, this results in less financial pressure, allowing you to pay things back and get back to zero more quickly for a fresh start. Most settlement payment processes will run for no longer than four years, but within that time period are reasonably flexible according to the needs of the debtor. This may seem like an extremely short amount of time for large loans such as mortgages, but the loan and payment reductions allow this kind of time limit to be practical.
Debt elimination programs can reduce outstanding balances by 40 to 70%, depending on the specific creditor. In general the average account included in a settlement will be reduced by 50%. The process provides added security for assets that represent a security interest. By reducing payments and eliminating a major portion of unsecured debt relieves pressure on secured assets. Debt settlement is often combined with mortgage loan modifications to help homeowners reduce their total payments toward debt and get for new mortgage terms. Most debt elimination programs terminate within 48 months, the same account with minimum payment could take over 20 years to payoff. The settlement of accounts allows for borrowers to begin the process of re-building their credit scores faster than bankruptcy which can remain on a consumer?s credit report for up to ten years.
Debt settlement and negotiation is becoming an increasing accepted manner for consumers to address the issues of debt overload without filing for bankruptcy. Consumers still need to review all available forms of debt relief before making a decision. One of the best ways to sort through the available options is to contact an attorney with experience in consumer debt relief to decide which option is in the best interests of the consumer. Getting on the road to financial recovery is simple the matter of taking that first step. - 23159
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for debt consolidation advice and guidance.
posted by X - Men @ 6:02 AM
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