Get Out Of Debt

If you have reached a point in your life where your debt has piled up and you are considering filing bankruptcy, then odds are that life hasn’t been too pleasant for you lately. One of the worst issues you will have at this time is the harassment by creditors, fear of repossessions, and utilities being turned off.

While these issues shouldn’t be the reason for filing bankruptcy one “benefit” (if it can be called that), is the automatic stay. The automatic stay is “automatically” put in place and accomplishes several things including protection against bill collectors, foreclosure, utility disconnections, and being evicted. There are some cases where it isn’t automatic such as when people have recently filed other bankruptcies. Here are some points of relief that the automatic stay can give you during this stressful time:

Foreclosure – An automatic stay will temporarily stop foreclosure. The creditor will probably be able to foreclose eventually if you file Chapter 7, but this will buy you some valuable time to make decisions. Chapter 13 bankruptcy is a better option if you want to keep your house and you can usually file a bankruptcy petition any time before the sale of your house. Utilities – If the utility company is threatening to cut off your water, electricity or gas, the automatic stay could give you up to 20 days of extra time. Once you file bankruptcy the automatic stay will force the utility company to reconnect your service if your utilities have already been disconnected. Wage Garnishments – Garnishments as in the case of child support and alimony will be completely stopped when bankruptcy is filed. Your paycheck will be protected and you will be able to take home a full salary and can also discharge the debt in bankruptcy. Eviction – Some help will be provided, but the new bankruptcy law makes it easier for landlords to evict you. If your landlord already has a judgment of possession against you when you file, the automatic stay won’t affect these eviction proceedings; the landlord can continue just as if you hadn’t filed for bankruptcy. Also if the landlord alleges that you’ve been endangering the property or using controlled substances there, the automatic stay won’t any good. In some cases, the automatic stay might give you a few days or weeks but the landlord can ask the court to lift the stay and the court will probably do so. Repossession – Your car cannot be repossessed while you have an automatic stay but this does not prevent you from having to handle the issue by reaffirming your car loan of returning it. You may be able to save your car with a Chapter 13 Bankruptcy but will have to make your trustee payments. Also, you need to be aware that a creditor can ask a judge to lift the stay so they can repossess.

As you can clearly see, an automatic stay won’t solve all your problems but it does give some temporary relief. It will stay in effect until you complete the bankruptcy and receive a discharge, the judge lifts the stay when a creditor requests it, and the property you want to protect is no longer a part of the estate. Be sure to read further information before you make any decisions about filing bankruptcy so you can be well-informed.

With sweeping changes in credit law, consumers find themselves scrambling for solutions. Should I get credit counseling? Should I declare bankruptcy? Can I declare bankruptcy? Where do I start? These are pressing questions facing many people today. In this brief article I will outline some steps to consider when developing your debt consolidation plan.

Debt consolidation is simply a step towards bringing your debt into a manageable state. The process as a whole may involve debt settlement, debt restructuring or more drastic measures like declaring bankruptcy. If you have concluded that the latter (bankruptcy) is your best course of action there is one important change in the law that you must comply with. New bankruptcy law requires that consumers seek ‘consumer counseling’ assistance prior to being eligible for bankruptcy. If the stress is mounting and financial doom looming I suggest you begin the counseling process right away.

Credit Counseling is a relatively painless process of evaluation and consultation. You will normally be able to reduce your debt payments by around 50% by allowing the credit counseling organization to represent you. This process will have an adverse effect on your credit but at this point it may not matter to you. If after you make an effort to utilize credit counseling and it proves to-little-to-late, bankruptcy becomes an available option.

As a credit specialist my recommendation would be to think long and hard before considering either credit counseling or bankruptcy. You can remedy most situations yourself with the right plan. Obtaining the right debt settlement software could help turn things around in as little as a few hours. A challenge I often see is caused by the chaotic state of mind that usually surrounds financial hardship. This dynamic may adversely affect your consistency. You know yourself. If you can dig in and fight for your financial solvency then you will save thousands of dollars and potentially save your credit rating. If you don’t have time, or the do-it-yourself road just isn’t for you, credit counseling or bankruptcy may be imminent…and that is ok. Hard times happen to good people.

In my opinion, the most important thing you can do to get ahead of this situation is take action. It is easy to avoid issues in hopes that they will just go away…it is human nature to do so. After all, who wants to speak to a rude collection agent or attorney after all? Unfortunately you will only be compounding the problems if you avoid them. Be brave. Either get a system for managing a debt consolidation campaign or contact a credit counselor for advice. Just because you talk to a counselor does not mean you are obligated in any way to use the service. As a matter of fact, I recommend taking advantage of their free expertise. I have reviewed and recommended both software and credit counselor’s for these endeavors. I have included a link below for your convenience.

Recovering from financial hardship is challenging but there is a light at the end of the tunnel. Remember the things that enrich your life. Your children, family, friendship, pets, good food and Mother Nature are reminders of what life is about. Take time out to enjoy yourself while taking equal steps toward solutions. Concentrate on the solutions and they will begin to manifest themselves in the form of growing security and peace-of-mind in your life.

Copyright December 2005, yourcreditcures.com, USA