No Nonsense Information on Bankruptcy and Debt Settlement

If you are now overwhelmed by bills and fear that your only way out is bankruptcy then you should know that there are other avenues to pursue. These are most certainly stressful times for a great many Americans financially and more and more of them are now turning to outside services and organizations that offer credit counseling, debt consolidation, debt settlement and assistance for declaring bankruptcy.

Bankruptcy

Bankruptcy is a legal means in which individuals and businesses are legally able to discharge some or all of their debts and financial obligations. In the case of Chapter 7 bankruptcy, the debtor is discharged of all of their debts. Chapter 13 bankruptcy means that that party is still responsible for some or all of their debts and must pay them over a period of Five years.

Stricter bankruptcy laws were put into effect in October 2005 that make it much more difficult to qualify for Chapter 7 bankruptcy. In the case of Chapter 13 bankruptcy, the court will dictate monthly payments that must be made and the court will dictate how much money the individual can keep for living expenses which are determined by IRS schedules.

If you are considering filing for bankruptcy then it is imparative that you consult with an attorney that is an expert in the field. It is absolutely not something to be entered into lightly and you must obtain as much information as you possibly can so you understand the ramifications.

For instance, bankruptcy filings will stay with you for 10 years and are public record. It will negatively affect all of your future attempts to obtain credit including credit cards, auto loans, mortgages and any other line of credit. In addition it may very well provide you from getting a job with some employers because they see it as irresponsible behavior and a character flaw. You may not even be able to get an apartment lease.

Debt Settlement

Debt settlement is nowhere near as severe as filing for bankruptcy but it to is a very serious situation that must be weighed carefully. Debt settlement, or debt negotiation as it is also referred to, is when an individual or company negotiates with their creditors to settle their debts for a percentage of what is owed.

For instance, if an individual owes $100,000 in medical bills they and the creditor enter into an agreement whereby the individual agrees to pay back $50,000 and the other $50,000 will be written off by the creditor.

Debt settlement is usually reserved for people that experience unforeseen hardships such as catastrophic medical bills and/or loss of employment. Like bankruptcy it to is reported on the individual’s credit record and remains for up to seven years. But unlike bankruptcy, it is not a matter of public record.

The preceding information on bankruptcy and debt settlement is just that, information. If you believe bankruptcy is a better option for you then you must contact an attorney that specializes in bankruptcy proceedings. Debt settlement, or debt negotiation is something you can do on your own or you can contact a company that specializes in debt settlement to assist you.

What You Need to Know About Debt Settlements