Consumers Have Several Options To Eliminate Debt
The depressed US economy and the implosion of real estate market nationwide have pressed consumers to the point where it is impossible for them to keep their payments current on credit card and tons of consumer debt. For consumers seeking relief from crushing debt loads there is an assortment of debt relief options available. These options include bankruptcy, debt consolidation, debt counseling, and debt settlement programs. Of these options bankruptcy and debt settlement programs are the options most often selected due to their due to their advantages in reducing current payments and collection actions by creditors, as well as the major reductions in outstanding debt balances.
For consumers who elect the option of filing bankruptcy the most common filings are under either Chapter 7 or Chapter 13 of the Federal Bankruptcy Code. Chapter 7 provides better outcomes for filers with its deep reduction of or outright dismissal of the petitioner?s debts. Before the rewrite of the Federal Bankruptcy Code in 2005 Chapter 7 filings composed the majority of consumer filings for just those reasons. Since the overhaul of the bankruptcy code the choice of a Chapter 7 or Chapter 13 filing is decided by the Court after apply a means test, which in now the required first step in any consumer bankruptcy filing.
The required mean test is an evaluation of the petitioner?s income and expenses which is compared against debt redemption standards as determined by the Internal Revenue Service (IRS). If the petitioner?s income falls short of the IRS standards they are eligible to file under auspices of chapter 7, however they may elect to file under the reorganization standards of Chapter 13. Chapter 7 guidelines are very strict. If the means test shows that the petitioner has the ability to pay any amount towards debt repayment, the filing will automatically be entered as Chapter 13 bankruptcy.
In either case the petitioner is required to attend credit counseling and budget analysis at their own expense. Chapter 13 filings do provide relief on current payments, but is not anywhere near as consumer friendly as Chapter 7. It also carries other disadvantages, such as having the petitioner?s finances overseen by a court appointed trustee. The invasiveness of Chapter 13 filings very often turns consumers towards professional debt settlement services.
Added security for secured assets ? Getting your payments down and getting rid of some of your unsecured debt helps you get rid of the pressure on your secured assets. For instance, debt settlements are mixed in with loan modifications to assist homeowners in lowering all their payments geared towards their debt and thus, improve their chances of being able to get new terms on their mortgage.
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.
Quicker improvement of your credit rating ? Settling their accounts lets borrowers start being able to get their credit rating up faster than if they filed bankruptcy because a bankruptcy remains on a credit report for 10 years and on a public record forever. Debt settlement and negotiation is extremely popular with people struggling to pay off their bills due to the advantages of it over other types of debt relief, such as bankruptcy. Borrowers must still become familiar will all the methods of relieving their debt before they make up their mind on what to do. The most superior method to go through the various methods is to work with an experience lawyer who understands all sorts of debt relief methods, so they understand which one is best for them. Putting yourself on the street to monetary victory is just that easy. - 23311
For consumers who elect the option of filing bankruptcy the most common filings are under either Chapter 7 or Chapter 13 of the Federal Bankruptcy Code. Chapter 7 provides better outcomes for filers with its deep reduction of or outright dismissal of the petitioner?s debts. Before the rewrite of the Federal Bankruptcy Code in 2005 Chapter 7 filings composed the majority of consumer filings for just those reasons. Since the overhaul of the bankruptcy code the choice of a Chapter 7 or Chapter 13 filing is decided by the Court after apply a means test, which in now the required first step in any consumer bankruptcy filing.
The required mean test is an evaluation of the petitioner?s income and expenses which is compared against debt redemption standards as determined by the Internal Revenue Service (IRS). If the petitioner?s income falls short of the IRS standards they are eligible to file under auspices of chapter 7, however they may elect to file under the reorganization standards of Chapter 13. Chapter 7 guidelines are very strict. If the means test shows that the petitioner has the ability to pay any amount towards debt repayment, the filing will automatically be entered as Chapter 13 bankruptcy.
In either case the petitioner is required to attend credit counseling and budget analysis at their own expense. Chapter 13 filings do provide relief on current payments, but is not anywhere near as consumer friendly as Chapter 7. It also carries other disadvantages, such as having the petitioner?s finances overseen by a court appointed trustee. The invasiveness of Chapter 13 filings very often turns consumers towards professional debt settlement services.
Added security for secured assets ? Getting your payments down and getting rid of some of your unsecured debt helps you get rid of the pressure on your secured assets. For instance, debt settlements are mixed in with loan modifications to assist homeowners in lowering all their payments geared towards their debt and thus, improve their chances of being able to get new terms on their mortgage.
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.
Quicker improvement of your credit rating ? Settling their accounts lets borrowers start being able to get their credit rating up faster than if they filed bankruptcy because a bankruptcy remains on a credit report for 10 years and on a public record forever. Debt settlement and negotiation is extremely popular with people struggling to pay off their bills due to the advantages of it over other types of debt relief, such as bankruptcy. Borrowers must still become familiar will all the methods of relieving their debt before they make up their mind on what to do. The most superior method to go through the various methods is to work with an experience lawyer who understands all sorts of debt relief methods, so they understand which one is best for them. Putting yourself on the street to monetary victory is just that easy. - 23311
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for debt consolidation advice and guidance.
posted by Mr. Forex at
12:14 AM
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