Are you struggling with debt? If so, this is the exact place for you to find some answers. When buried by overwhelming debt, it’s very important to understand that there are different methods of getting out of debt. The job of figuring out which method poses the most appropriate solution for your situation, is on your shoulders. But remember, that taking on this particular additional responsibility will result in a staggering relief of stress due to constant financial crisis.
Which get out of debt method is best for you?
- Debt Consolidation
- Debt Management
- Debt Settlement
Debt consolidation does not erase your debt, but it does provide lower rates and affordable payments as well as debt counseling. Some find it to be a worthwhile answer. Debt management provides a similar benefit in credit counseling, but again, does not erase debt owed. Instead debt management focuses on alleviating immediate financial struggle with lower payments right now. Debt settlement decreases the amount of debt owed, but depends on being able to offer a lump sum as immediate payment to “settle” accounts.
The final method to be discussed is bankruptcy. Bankruptcy is the only option that provides the filer with near immediate relief from financial stress, expert counsel and a clean slate with debts erased.
Some burdened with severe financial crisis will immediately suspect that bankruptcy sounds too good to be true. They view it as a drastic measure to be avoided at all costs. In today’s financial atmosphere more are willing to accept bankruptcy as the best solution, but still find it embarrassing or scary. Frankly, it’s fine to be nervous. Declaring bankruptcy is a big step, but don’t fear it so much that you stand still and do nothing.
It is far better to go through the bankruptcy process than to do nothing or to attempt another debt reduction method that won’t actually solve your problems. Doing so will ultimately result in an increase in your financial worries. Approach the decision to file logically. Understand the basics of bankruptcy. Consider the different options (Chapter 7, Chapter 13, and additional options for businesses).
Chapter 7 is the most common form of bankruptcy. It’s often referred to as a “liquidation bankruptcy.” Urban myths indicate that when filing Chapter 7, you must lose all your assets. In reality, Chapter 7 filers get to keep any assets covered by the exemption law in the state the petition is filed. The majority of filers are able to keep all their property. Unprotected assets (for instance, money in a checking account) will be liquidated to pay back creditors through your assigned bankruptcy trustee. The Chapter 13 is often referred to as a “reorganization bankruptcy.” Under a Chapter 13 bankruptcy, a repayment proposal is filed outlining a series of payments to partially pay off accumulated debt over a period of 3-5 years. There are additional qualifications for those who wish to file for Chapter 13, but in some cases, this type of bankruptcy can help people save their vehicle or home by providing them with the time to get caught up on their payments toward those debts.
Why do people decide not to file for bankruptcy if it’s so helpful? Individuals who file will experience negative effects on their credit ranking. They won’t be able to secure new credit immediately after their bankruptcy and the filing stays on their credit report for years. For most, this is a small price to pay for the peace of mind that comes with finally experiencing financial freedom after years of overwhelming financial obligations.
Call Westgate Law today. We’re ready to help you navigate this decision and can explain in depth how the process works. It’s always a good idea to know what you’re getting into before you make any commitments.