Debt Relief Settlement

Most debtors who have a rather large amount of debt that they are failing to pay off, at one time or another have considered the option of filing for bankruptcy. In this brief writing I am going to give you a couple very solid reasons why you should steer clear from a bankruptcy proceeding at all costs, if possible. A lot of debtors do not recognize the very negative impact a bankruptcy can have.

1. Bankruptcy has an extremely negative impact on your credit score and becomes a lifetime public record!

Bankruptcy is one of the nastiest derogatory remarks that you could have put on your credit report. Thus making any more credit you try to get extremely difficult, and if you do receive credit it usually comes accompanied with a extremely inflated interest rate. Additionally, it will reside on your credit history for between 7-10 years. Even once it is removed from your credit history it remains a public record for the rest of your existence. So when you apply for new credit at any point in the future, when they ask whether you have ever filed bankruptcy legally you must answer yes.

2. Brand New Bankruptcy reforms in 2005!

In 2005, Congress approved a law which forces anybody filing for a Chapter 7, which will wipe the slate clear of all your debts much more difficult. Basically if you have an income producing job and a home than most assuredly you will go through a review to find out if you should go through credit counseling first for at the minimum 6 months. According to NFCC close to 80% of debtors who apply can't follow the strict rules set from the creditors to finish the program thus throwing them back into the bankruptcy proceeding. That's when Chapter 13 comes into light which is a method of personal bankruptcy in which the court will decide how much you will pay back each collector you list based on your monetary situation.

3. The court will control your income with a Chapter 13 Proceeding!

Before the new law was approved in 2005 many debtors that would have been able to claim Chapter 7, were now forced to go Chapter 13 instead. Chapter 13 requires that you go over with the judge and show to them all of your finances. You must show all forms of income and assets. The court will review your expenses compared to your income and then determine how much money you will have to dish out each month. The court decides this for you, leaving you with no say in this process. If you have liquid assets such as a paid off car they can force you to sell them off, within State law, to pay down your debt. There are timed financial hearings each year and if your money making abilities change you must tell this to the judge, this could bump up the amount you pay back. If you have multiple family vehicles you might have to sell one to help pay off your debts. They for lack of better words tell you what you can do with your income. If you have the premium cable you will need to cut down to standard cable, if you consume high priced steaks every night you will need to cut back to hamburgers. This could be a very hurtful and embarrassing proceeding.

These are all extremely negative things that people should be made conscious of before meeting with a bankruptcy lawyer. A lot of lawyers will not disclose these poor aspects of claiming bankruptcy. Bankruptcy is available for a purpose and for some individuals they have no other method available to them and must file for a bankruptcy proceeding, however the majority individuals go bankrupt unnecessarily. A very attractive substitute option to bankruptcy is credit card debt settlement. With debt settlement in many cases you will save a lot more money than you would have with a Chapter 13, besides you will be out of debt faster as well, and not experience the many negative consequences of a bankruptcy proceeding.

John Sellars is a debt analyst with the US Consumer Advocate, which practices debt relief.

To start off I would like my readers to first realize which consumers are in need of debt settlement as a means to become debt free. The first people in need of credit card debt settlement are those who can afford only to make the monthly minimum payment and that is all they glance at when looking at their monthly statements Another prime candidate for debt settlement is the consumer who has already fallen behind. The next person who is ready for debt settlement is the homeowner with money coming in who is sincerely thinking about filing for bankruptcy.

So your next question might be what is debt settlement? Debt settlement is a process of building up enough capital to arrange a one time payment that is negotiated to a lower amount than the actual balance. The next issue that pops into mind for many debtors at this point is, how do you get your creditors to agree to a lower amount?. Well the answer is rather straitforward, you must fall past due on the debts owed. The reason being no credit card issuer in the world is favorable to negotiate on a bill that is current. Which is logical why would the creditors accept less if they feel you can continue to make their monthly minimum payments for the next two to three decades, profiting them tremendous sums on interest. So one must understand that in order to get a good settlement you need to go behind on payments.

One could ponder how can I improve my situation from doing the debt settlement method? The greatest advantage of settling your debts is saving a tremendous amount on what is owed. Which in turn correlates with the next benefit, that of saving time. With the debt settlement method a debtor can expect to save around 40-50% of what is owed, and become free of debts within 2-3 years.

When searching for a organization to hire for debt settlement one must do their research first. To ensure the organization you will be utilizing is honest and can get the job accomplished correctly. A appropriate place to start is too read up on the BBB, many good standing companies will be members with the BBB. One More extremely wise measure to take when looking for a company to do debt settlement is reviewing the Attorney General. Most states' Attorney General will list any company that is under investigation. Obviously any company under investigation would not be a good company to enroll with.