Get Out Of Debt

Filing for bankruptcy is a drastic measure that overwhelms most people because of the detailed paperwork that must be done. In addition, for most people it is an emotionally draining experience to go through. Because of the complexity of the matter, and the fact that emotions can cloud judgment, it is a good idea to get bankruptcy help to be sure that a chapter bankruptcy filing is done correctly.

One of the first places to go for help is to one of the credit counseling agencies. They are sometimes able to help people avoid going into that final step of filing for bankruptcy. Often, they can suggest ways to help debts collections situations or they can negotiate with the creditors and try to make arrangements, either reducing the monthly payments or reducing or even eliminating the interest charges and late fees. In some instances, they can get both the interest rate on a loan reduced and make arrangements for easier payments.

The reason that this kind of bankruptcy help is often effective, is because creditors know that if a person is in a financially bankrupt position, then the chances of ever collecting on any of the debt owed to them is nil. It makes sense for companies to cooperate when a debtor is having trouble making their payments and to work with them to make a new financial plan.

The credit counseling services offering help usually start by digging into the person’s or couple’s financial situation and then will help to determine if filing for it is going to be necessary in their case. Many times, when a person is in a panic mode because they have had numerous bill collectors constantly calling them, they move toward a chapter bankruptcy filing as a knee-jerk reaction before they have found out if they have other options.

Even though the credit counselors will sometimes determine that the best way to help debts incurred is to file for one, at least the consumers who receive the counseling feel more assured before taking such drastic measures. However, it should be noted that some of the credit counseling services do charge a substantial fee for their services.

Another avenue of help, or better said, another route which might help one to avoid declaring broke altogether, is by using a debt consolidation service. Sometimes, credit counseling services can arrange for debt consolidation as well.

The purpose of consolidating your debts is to give you one single payment to make per month and to secure financing with a lower interest rate. This can help make the current debts more manageable and bring the monthly payment down so that it can be worked into the family budget.

If credit counseling or debt consolidation are not enough and it is evident that filing for it will be necessary, then you should seek out a qualified lawyer for the legal help that you will need. Making sure that you get an experienced lawyer who specializes in the different chapter bankruptcy filing types, will help to assure that your case is handled professionally and that the required paperwork is properly filed in a timely manner.

This is not an area where one should attempt self bankruptcy or try to save a few dollars. Not properly filing the paperwork and adhering to the court timeline can result in your court record being thrown out, which will leave you vulnerable to the tactics of the creditors and collectors again.

If you find yourself in the situation of struggling to meet your monthly obligations or if you have experienced a life-changing event, then getting bankruptcy help to assist you on how to best proceed is probably a good idea. The worst thing you can do is to ignore a growing financial problem, as the condition will only get worse if positive action is not taken. Even though bankruptcy is a momentous decision, it is provided for through Federal law to allow people to have a new start financially when the situation arises.

Bankruptcy, although necessary for many individuals, should be utilized as a last resort once all other options have been reviewed first. One of the first things that a person can do is review their own spending patterns or habits before seeking help. If acted upon before the problem reaches the point of no return it is conceivable that there may be no need for outside intervention.

There are several resources available online that are designed to help an individual create a household budget without any cost. Also most credit counseling agencies should be able to provide you with a household budget at no cost. There are also bankruptcy attorneys that will assist in this as well, however it is paramount that these services remain free of cost. Be leery of Credit Counselors or Bankruptcy Attorneys that charge upfront for assisting in the creation of a household budget, as it seems to me that if someone is willing to charge you in order to help you get out of debt on your own then it might be that there intentions go beyond wanting to help you and fall more in line with wanting to help themselves. Now don’t get me wrong, if there is a continual service that they provide then by all means there should be some fee charged.

So before attempting a “Do it yourself bankruptcy” you may want to seek advice from an actual Bankruptcy Attorney or a certified Credit Counseling Agency first. Just be sure that the initial advice is provided at no cost. Also if continual assistance is needed remember to shop around, fees for practically the same services can vary widely from one organization to another. Also make sure the organization that you choose to work with has the support services available to make your experience with them the best it can be.

Written by Rick Munster

I have written in the past about programs that do not tell consumers the truth, hiding every little detail possible in order to cash in on retainer and monthly maintenance fees. First and foremost avoid most agencies with these unnecessary charges unless they come highly recommended from a reputable source.

What is the truth? Many of us do not want to hear our interest percentage rates will rise, late fees and penalties will continue to accumulate, etc.. when we stop making our monthly payments to our creditors, and there is no one that can make them go away except for consolidation programs that will negotiate to lower interest rates. When consolidating all payments must be made on time otherwise we will be dropped from the program. In order to consolidate debt we must be current on all payments. Settlement programs can not stop these charges at all, and that is the truth.

So now we now if we consolidate we will be paying everything we owe back to our creditors plus interest. What most consolidation companies fail to tell consumers is that for as long as they are in the consolidation program their credit report will look as if they have filed for chapter 13 bankruptcy. This little detail is often not told by credit counselors. If credit score is important any type of debt relief program must be avoided.

The same goes for settlement programs, credit score will be affected as well. The only difference is the person’s credit report will not show a chapter 13 mark. The accounts will be reported as delinquent until settled or payed in full. Again, if credit score is important debt settlement is not the route to go either.

Are there any tax implications on debt settlements? YES. On any savings over $600.00 on any particular settlement a person will receive a 1099 statement and any money saved over $600.00 will have to be claimed as income unless the persons losses for one year are greater than the gains. Meaning if when tax time rolls around a person shows a negative margin on their earnings, for more information on this matter we should consult a licensed tax broker.

Can we be sued, have wages garnished, property attached to? YES. Any creditor has the right to the assert legal action to claim money owed. When we sign our contract agreement we give the credit company or companies the right to do so. If any debt relief agency tells anyone none of the above can happen, they are lying. Some individuals are very lucky, and never even get a phone call from a creditor or a collection agency and have the statue of limitations expire on their debt. I believe everyone must be aware of these possibilities before pursuing settlements on their debt.

So far we know of the fees that will be accumulated on our debt if we discontinue our payments to our creditors, what will happen to our credit reports and scores, the tax implications of debt settlements, the legal implications. Do we really need someone not telling us all this? If I were looking for debt relief help more specifically debt settlement I would like to hear all these little nasty details before deciding to negotiate on my debt. I would be able to sleep better at night knowing the consequences that may or may not happen.

Debt negotiation has yielded great savings to many, especially if they are well informed and the debt relief agency they choose to work with is honest and up front. Even with some of these difficulties waiting to happen some of us have no other choice but to seek debt relief, BE SMART and ask questions, if the answers you are getting do not satisfy you, keep searching. The right debt relief agency is out there for you, just look hard enough and you will find it.

I recently had the privilege of discussing credit card counseling with a local banker. Among the things he mentioned one of them stood out in the report. After review it became know that people in debt are seeking credit counseling programs to seek debt relief.

The problem however is the long time frame associated with the programs. The monthly payments remain the same as well causing the same issue to arise being the strain of the monthly payments on household budgets. Many people have even enrolled in CCCS programs paid the fees and then dropped out. This is where the problem lies.

Ethics should come into play in this scenario. When dealing with an indebted consumer many credit card counseling companies act like debt collecting sharks to gain enrollments. Pushing the consumer by pointing out the non-profit status of the company to enroll in the program. After this shaky enrollment process they deduct the first monthly payment that goes entirely to fees for the service.

If the next month the client fails to make a payment there is no follow up done to see why. The reason being that the credit counseling company is paid for and sponsored by the credit card companies themselves. The IRS has done much research into the non-profit CCCS programs but have had little success with completely eradicating predatory credit counselors. Additionally the credit counseling firm is paid a “fair share” usually between 7-12% of the debt directly back to the credit counseling agency.

Consult with a banker or an attorney to see if credit counseling or debt settlement is best for your financial needs.

If you are planning on filing bankruptcy in the near future, you can plan on attending bankruptcy approved credit counseling as well. United States law now requires that all persons who file must go through this counseling so there is no way you can get around it. The court will decide how long you will have to spend in credit counseling.

The court approved bankruptcy credit counseling agency is the only one that you will be allowed to use. You will not be able to pick any old counseling service because the courts will not just accept any ordinary firm. Court orders must be followed or else you could face some major setbacks including having to file for bankruptcy all over again. This is required for anyone filing bankruptcy whether or not their reason for filing has anything to do with financial mismanagement.

So, your first step is to find an agency that offers these services and has been approved by the courts. This is relatively easy as there is generally a list in each county or state of approved counselors or agencies within the general area.

If such a list does not exist or you have trouble finding one, conduct a search for bankruptcy credit counselors or look for a bankruptcy mediator and ask if the courts will approve their services. This cuts out the trouble of agreeing to a counseling service that is later not approved by the courts.

Now, even if you do find a list of bankruptcy approved credit counseling agencies, how do you know which one is right for you? Well, now you have to do your homework. You need to find one that you feel comfortable with. You need to find an agency that actually helps you learn from your mistakes and teaches you how to correct the problem instead of covering it up.

Almost all bankruptcy approved credit counseling firms and agencies have undergone examination by the government which has approved their services. It is common to begin feeling a bit invaded by the government for being forced into getting counseling, but try to look on the bright side. The right counseling service can really help to change your financial habits around so that you never have to wind up filing for bankruptcy ever again.

With this service, you will learn many different skills that could help you learn from past mistakes and avoid making them again. For instance, you will learn about budgeting. Budgeting will come in handy in any stage of your life. You will learn how to properly designate your income and ensure that you stay on track in your financial affairs.

Money management is a crucial skill that you will learn through proper credit counseling. You will learn the difference between what your priorities are and what things you can live without. Despite what many people assume about bankruptcy, it will not make your bills completely disappear. It is extremely important to learn how to effectively manage your money so that you do not wind up making the same mistakes over again.