June 4, 2010

When is Bankruptcy the Best Option?

Posted in Bankruptcy tagged at 7:19 am by demetriagraves

It seems like only yesterday when the real estate market was booming and many people were investing, whether it was their own home or an investment property.  Then the bottom of the sub-prime lending market dropped out, leaving many people facing either foreclosure or bankruptcy or more typically both. Which left a devastated economy in its wake.

Bankruptcy, affects every aspect of a consumer’s finances, especially their home. Many people facing the loss of their home are filing for bankruptcy, hoping to save their icon of the American dream. So how do you find out what is the best answer for your own particular circumstances?

For the millions of Americans struggling with debt, there are a lot of voices that claim to help. Unfortunately, the variety and differences in the options can be downright disorienting. When faced with big financial difficulties, it’s important to know that there are choices for resolving financial debts. Here’s some typical actions that many people try as a first line of defense against a looming financial troubles.

There is the option of negotiating with credit card companies for a decrease in interest rate or a grace time period of a calendar month or so to get up to date. In the event that their credit is fine but they‘re feeling strapped, they could go obtain a personal bank loan or even home equity loan in order to pay off their debt. These days many people are upside down on their home and this may not be so easy to do.

Another option is using a debt consolidation company working as a mediator, they could set up various choices with their debt collectors in order to help make a different payment plan. Debt consolidation simply means taking out a single loan to pay off a number of other loans. This method can simplify the process by requiring the debtor to only pay a single bill as opposed to keeping up with several. This single loan can offer a better interest rate than the ones before, which can help to pay off the loan faster. One of the risks of debt consolidation is that in order to obtain the loan, individuals must put up collateral in case they default on this single loan. More often than not, the collateral is their home. Additionally, most debt consolidation programs extend terms, which means though the monthly payment is lower, you are in debt longer, thus paying the lender more.

Credit counseling involves sitting down with a councilor to discuss how to avoid incurring debts that can’t be repaid. Additionally, it often involves establishing a debt management plan that helps a debtor repay debt. During the process, an individual can learn lots of great information yet in the end, some people who get counseling actually end up paying more than their original debt, according to one study. Credit counseling is also rife with many scam artists who can disappear with your money overnight.

Millions of Americans have gone through a debt settlement program to handle their credit card debt. For a hefty fee, a debt settlement company will claim to settle your debt with a credit card company for less than the amount you owe. The problem is that debt settlement is an extremely difficult solution to pursue and many settlement companies don’t perform the services that they say and the process is confusing, costly and it could very well ruin your credit in the process.

If the options above aren’t workable and there’s no easy way to solve a financial meltdown, filing for bankruptcy with a Chapter 7 bankruptcy attorney is the most practical option. Occasionally an individual’s credit rating too tarnished to qualify for an individual loan to pay off their costs or they do not have sufficient equity to obtain an equity loan. Although negotiating with debt collectors may appear to be the most effective starting point, usually these companies pay no attention to individual requests, particularly when they do not know precisely what to say or exactly how to request it. This is where and experienced attorney who specializes in bankruptcy can help you out with the right advice.

If your financial situation appears to be really hopeless and paying back your financial responsibilities isn’t possible. Consulting with a Chapter 7 bankruptcy attorney would be the best choice for relief.  I offer a free confidential initial consultation, where we can go over your options and get all your questions answered. During this consultation you’ll receive enough information so that you can determine if filing bankruptcy is actually the best option for relief. You’ll find out exactly what filing will and will not do, so that you can make an informed decision regarding your monetary affairs. It’s important to stress the importance of having an attorney who knows bankruptcy law to ensure filing is properly done, so that you can obtain the complete level of relief that you are eligible for.

Individuals can file for bankruptcy with a qualified attorney who represents the debtor in court. In most cases, bankruptcy completely eliminates debt. In 2009, bankruptcy filings were 34 percent nationwide. Some people may be too deep in debt for any of the above solutions to realistically work for them. That’s when bankruptcy is a good option. While the process appears complicated, a bankruptcy attorney will be able to help you understand your options and avoid making bad decisions. You get one chance to file bankruptcy right the first time. So you want to make sure that you have an experienced bankruptcy attorney on your side.

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