Too much credit card and other unsecured debt?  Not able to keep up with the payments?  You may be a prospect for Debt Settlement.

But, before you decide, consider the following:

Debt Settlement is a very effective program to help people settle unsecured debts for less than the total balance due.

• The unsecured debts I'm talking about are:
• Credit Cards
• Store Cards
• Home Shopping Club accounts or cards
• Personal Loans
• Repossession Deficiency Judgments
• Medical Bills
• Personal Student Loans (although there are programs to help on Federal Student Loans as well)

When faced with too much debt and not enough income or cash flow to keep up with at least the minimum payments due, there are only a few options to keep the debt collectors at bay:

A Debt Management Program

A Debt Management Program used to be called a "Credit Counseling Program" and sometimes it is still called by that name.  In a Debt Management or Credit Counseling Program, a person signs up with a "non-profit" (only for taxable reasons, YES, you will be paying fees!), and they will have set up a program with each of your creditors.

Usually, the interest rates are reduced or sometimes eliminated, late fees and over-the-limit fees are usually forgiven after you have made a few payments, and your account is now classified as being paid as agreed or on time.

However, the problem with a Debt Management or Credit Counseling Program is that there is very little forgiveness if you miss or are late on a payment!  I've seen people who had been consistent for many months, and then, due to an emergency, just couldn't come up with the total due that month.  The Debt Management Program was canceled or voided and they were back to square one!

Also, in a Debt Management or Credit Counseling Program, the total monthly payment may be more that the total minimum monthly payment you are required to make now!  And, the company is charging you a monthly service fee as well!

So, if you go through the process of trying to enroll in a Debt Management Program and find out you cannot qualify, what now?

A Debt Acceleration Program

A Debt Acceleration Program (sometimes referred to as a Debt Snowball Plan) is perfect for someone who is making the minimum monthly payments on each of their debts and yet, due to high interest rates and annual fees, realize that at this rate, it will take 15-20 years to pay off those debts!

A person who should look into a Debt Acceleration Program also could add another $100 - $200 each month to help reduce or accelerate paying off these debts.

Most people in a Debt Acceleration Program are DEBT FREE in 48-60 months, saving thousands of dollars in interest and fees!

I prefer the Debt Acceleration Program to a Debt Management or Credit Counseling Program because as far as your credit report is concerned, you were a very consistent debtor and not only paid all of your payments on time, but actually did so sooner than required!

OK, but what if you are one of so many people that due to:

• Job loss
• Divorce
• Disability
• Death of loved one
• Major Financial Emergency

...just cannot meet the total minimum payments due on your unsecured accounts and cannot qualify for a Debt Management or Debt Acceleration Program?

Then, you should consider a:

Debt Settlement Program

Debt Settlement is designed for people who have a severe financial hardship, have tried to keep up with all of the bills, but some or all of their credit card accounts and other unsecured debts have been turned over to debt collectors.

These debt collectors are calling all day and even harassing you at work. But, before I explain how a Debt Settlement Program works and could help you, here's how to put a stop to those collection calls:

In a Debt Settlement Program, you will go through a thorough financial overview to determine several things, such as:

• Type of employment (self or W-2)
• Basic Monthly Budget
• Retirement status
• Type of income you are receiving (disability, social security, unemployment, etc.)
• Assets (mainly do you have equity in your home)
• Are you renting?

Once you know where you stand, you will have an amount (that you can afford) deposited into your Debt Settlement Reserve Account (FDIC insured bank) monthly.

The Debt Settlement company will be contacting your creditors and/or debt collectors to arrange settlements.  As you reserve account grows, each of your accounts should be settled for much less than the total balance due.

But finally, what if you just are barely making ends meet on your basic bills and have little or nothing left over to put towards a Debt Settlement Program?

Then, you should consider:

A Bankruptcy Program

There are basically two types of Bankruptcy Programs for individuals:

• Chapter 7
• Chapter 13

The Chapter 7 is not used as much these days as it is basically designed for someone to liquidate any assets they have (obviously, not very much) and that small amount is paid to each creditor, and the balances of your debts are "forgiven".

In a Chapter 13, a bankruptcy attorney will present a type of repayment plan to the bankrutpcy court based on your financial status.  Usually, a person will be making a monthly payment of $200-$400  (or whatever your bankruptcy attorney comes up with) for about 3-5 years.  Each of your creditors receives a small portion of the balance due.

At the end of the Chapter 13, the balances of your debts are forgiven.

Oh, by-the-way, if you receive a 1099-C, in most case, you should not be liable for any additional taxes due on the amounts forgiven.

Debt Settlement is a great program for the right person.

 Photo Credit:  Daniel Oines

If you find yourself unable to pay your bills, about to lose your home, or in a financial hole so deep that you can't climb out of, then it is time to look into filing for bankruptcy protection.

This is the final blog about DEALING WITH DEBT.  There are basically 3 ways to deal with debt:

• Debt Management
• Debt Settlement
• Bankruptcy

In a bankruptcy, you will eliminate most of your debt or you will be able to schedule a repayment plan that will fit your budget, given your dire financial circumstances.

But, bankruptcy comes at a cost of your credit score and possibly some of your assets.

Yes, after you complete your bankruptcy, you can still get credit, but usually the interest rates are higher and the credit limits are lower.

This is why it is so important to gather as much information you can from an experienced bankruptcy attorney.  The initial bankruptcy consultation should be free and most bankruptcy attorneys will work with you as to payment of their services and fees.

Individuals filing personal bankruptcy will generally be able to file a CHAPTER 7 or a CHAPTER 13 bankruptcy.

Under normal circumstances, a Chapter 7 bankruptcy will take about 90 to 180 days to complete.  A Chapter 13 bankruptcy will take about 3 - 5 years, depending on several factors.

Good news!!!!  Once your bankruptcy attorney starts the process, the debt collection calls will stop.  If you are not sure if bankruptcy is the best choice for you and would like to put a stop to the debt collection calls, click below:

Individuals or couples with few assets and are looking for a FRESH START, tend to file a Chapter 7 bankruptcy. This type of bankruptcy is basically a liquidation bankruptcy in which a debtor trades all of their non-exempt assets as payment for all of their dischargerable debt.  Many, if not all, personal possessions are protected by exemptions and most consumer debt, such as:

• Credit Cards
• Store Cards
• Personal Loans

Individuals or couples looking to catch up on mortgage payments, get rid of 2^nd mortgages, or who are ineligible for Chapter 7 bankruptcy, can file a Chapter 13 bankruptcy.  A chapter 13 bankruptcy involves making a deal with the court to pay a certain amount of your income to the court each month in return for getting rid of all of your dischargerable debt. 

People will choose a Chapter 13 Bankruptcy because there are certain types of debt that only go away in a chapter 13 bankruptcy and, there are certain advantages that can only be had in a chapter 13 bankruptcy.  This type of bankruptcy can be used to catch up on mortgage or child support payments.  However, there is a danger of not completing your plan and thus not getting a discharge.

Filing bankruptcy does not mean that you will lose your home or your car. 

In fact, in some situations, filing bankruptcy will even allow you to keep a car or home that you were about to lose.  This is because bankruptcy allows you to protect some or all of your assets with exemptions.  These are set amounts of personal property that you can protect during a bankruptcy.  Retirement accounts are generally protected as are certain support payments that you may be receiving.

Filing for bankruptcy does not mean that everyone you know will find out!

Only the necessary parties are inform of your bankruptcy filing.  Individuals who receive notice of your bankruptcy filing are creditors, co-debtors, and co-owners of shared assets. 

A bankruptcy will stay on your credit report up to 8 years, but it will have less effect with each passing year.  Filing bankruptcy may hurt your credit score in the short-term, but it allows you the chance to start rebuilding it right away.

Still not sure how to deal with your debt?  Get answers by clicking below:

Blog article written by: Noah Bishop of BishopBankrutpcyLaw.com

Photo by: www.stockmonkeys.com

If you live in Oregon, I've got some good news on how you can find debt relief!

If you are fighting each month to just barely get by, you are not alone.  Statistics abound about how the average family has several credit cards and several thousands of dollars of debt.

What can you do about it?

Face the problem, honestly!

When is the last time you sat down and completed and honest, up-to-date HOUSEHOLD BUDGET?

If you are having a difficult time with too much credit debt, then the natural tendency is to avoid or ignore the facts, but you can't get out of debt without know exactly where you stand financially. Once you know exactly what you have coming in and exactly what you are spending your money on each month, we can devise a plan.

BASIC DEBT RELIEF OPTIONS:

DEBT MANAGEMENT

In a Debt Management Program, you will be making ONE PAYMENT to a Debt Management Company or what some people call a Credit Counseling Company.

This company will in turn have contacted each of your creditors to arrange a repayment plan.

Most Debt Management Programs take about 48 months to complete. 

Once you have competed the program, you will not only have saved a substantial amount of money in reduced interest and fees, but your credit report will reflect that you have $0 balances and your credit score will start to improve.

The problem with most Debt Management Programs is that depending on the amount of debt you owe and your left over or net, disposable income each month, you may not qualify.

Example:

Let's say you have $25,000 of various credit card debt.  At 2% of the $25,000 you owe on all of your cards, your minimum payment was $500.

Because the credit card industry figured out that they will make much more money in the long run if they make the minimum payment so small that that most people will take 10 -15 years or more to finally repay the debt.

And, the most tragic thing is that if and when you finally do pay all of the credit card debt, you will have paid 3 - 4 times more than you originally borrowed!

But in a Debt Management Program, you most likely will need to pay about 2.5% of the total, or in this case of $25,000 total credit card debt, $625 monthly!

But don't panic!  There's another option:

Debt Settlement

In a Debt Settlement Program, your payment or actually, your deposit to a bank insured reserve account is based on several factors:

• The type of income you are receiving
• The amount you have left over at the end of the month
• Your health
• Your retiement status

In a Debt Settlement Program, your creditors will not be receiving normal, monthly minimum payments as before.

Most people who have so much debt that they cannot keep up have fallen behind already or have had some accounts turned over to debt collectors anyway.

A professional Debt Settlement Company will negotiate a reduced balance (usually around 50% and sometimes less) with the creditor or debt collector.

Once the debt has been settled (by lump sum payment or over series of payments), the debt collector will report the debt to have been "settled-as-agreed" to each of the Credit Reporting Agencies.

For more information about Debt Settlement, click below:

But what if you do not qualify for Debt Management or Debt Settlement?

If that is the case, then you may need to seek BANKRUPTCY PROTECTION from your creditors.

Bankruptcy is a viable option to finally get out of debt.  Bankruptcy should be viewed as the last option (in my opinion) and not just a "get out of jail card" so to speak.

You will need to sit down with a BANKRUPTCY ATTORNEY in your area to discuss your situation and your options.

Depending on your specific financial circumstances, you will most likely be placed in a Chapter 7 or Chapter 13 bankruptcy.  The bankruptcy attorney will explain the differences.

We have been helping Oregonians become DEBT FREE for over 10 years.  Don't let fear of the unknown keep you in contast turmoil over too much debt.

You have options for debt relief, and we can help!

When you have so much debt that you are not able to keep up with the minimum payments, your options are limited:

• Debt Management (or credit counseling) Program
• Debt Settlement Plan
• Bankruptcy

When is bankruptcy the best option?

Let me briefly explain how the first two options work:

DEBT MANAGEMENT PROGRAM

A Debt Management Program is a program designed for those who have substantial unsecured debt (mainly credit cards) and realize that even though they are making the required minimum payments, the balances are barely going down!

The average person will take 10-15 years (some experts estimate longer) to repay credit card debt.

And when and if it is repaid, the average consumer will end up paying back 3-4 times the original amount that they borrowed!

Think about that... If you have say, $20,000 of credit card debt and are just barely making the minimum payments, you could end up paying back $60,000 to $80,000!

In a Debt Management Program, you will have:

• One low monthly payment
• Reduced or sometimes even 0% interest rates!
• Waived late fees (usuallyl)
• Eliminated your debt in about 4-5 years, saving thousands of dollars in interest and fees!

What if you cannot afford the typical 2.5% payment required of a Debt Management Program?

If you cannot afford the payment of a Debt Management Program, then you should consider a DEBT SETTLEMENT PROGRAM.

In a Debt Settlement Program, you will have:

• One low monthly payment (determined by your financial situation)
• Debts negotiated at approximately 50% of the balance
• Eliminated your debt in just 3-5 years, depending on an individual's circumstances

What if you cannot afford the reduced monthly payment of a Debt Settlement Program?

If you cannot afford the payment required of a Debt Management Program or a Debt Settlement Program, bankruptcy may be your best option.

There are basically 3 areas to examine in order to deteremine if bankrutpcy is the best option:

• Financial
• Ethical
• Legal

By the time you are considering bankruptcy, you should have already explored a Debt Management Program and a Debt Settlement Program, and determined that you cannot afford either of the reduced monthly payments. You have explored the FINANCIAL aspect of determining when bankruptcy is the best option.

But what about the the ETHICAL aspect of bankruptcy?

In most cases, getting to the point of bankruptcy is not your fault.  Maybe you:

• Lost your job
• Lost a spouse or loved one
• Sufferred a major illness or injury
• Went through a terrible divorce
• Or, many other reason too numerous to list

The point is, most people do not get to the point of bankruptcy from just spending too much.

No matter how you look at it, bankruptcy is basically saying, "I cannot keep my promise to repay my debts." It an tremendously emotional decision, and one that can have lingering effects for years.

Before you seek a bankruptcy attorney's counsel, ask yourself if there is any way you can repay your debts WITHOUT going bankrupt?  Can you:

• Ask for help from friends or family
• Get a second job
• Make cost saving/budget cuts or even create a crisis budget
• Sell some of your "toys" (extra car, boat, RV...)

I am not an attorney, so I am not goint to give any legal advice. To explore the LEGAL aspects of filing bankruptcy and to see if you qualify for either Chapter 7 or Chapter 13 bankruptcy, you need to seek the help of a qualified bankruptcy attorney.

There are many factors to consider when determining if bankruptcy is the best option. We can help you make the best choice with a FREE no obligation consultation with one of our Debt Solutions Specialists.  Click on the link below or simply give us a call at 1-877-492-4109

Have you ever wondered about what is the difference between a chapter 7 and a chapter 13 bankruptcy?  This post will help clear up the confusion!

DO NOT take the information to follow as legal advice!  Before making any decisions, you should consult an experienced, licensed bankruptcy attorney. 

Chapter 7 bankruptcy is a liquidation form of bankruptcy. 

This means all of your non-exempt assets get sold and the proceeds are shared amongst your unsecured creditors. 

However, many of your assets will be classified as "EXEMPT", and will not have to be sold if they fall under the following guidelines: (again, these change all the time, so make sure you consult a licensed bankruptcy attorney!)

Few examples of exempt assets:

How do you value your property?

The rule of thumb is to use garage sale prices, although current events can cause certain items’ value to sky rocket and the Trustee will sell it for what he or she can receive and not what you think it is worth.

It is important to know which debts get discharged in a Chapter 7 bankruptcy and which will remain after filing. 

After the bankruptcy completes (which is usually 4 months if there are no non-exempt assets or a minimum of 10 months if there are non-exempt assets) you receive a discharge.  This means you are no longer responsible for paying those dischargerable debts.

In most cases, a Chapter 7 bankruptcy is more attractive than Chapter 13 because it is much shorter time commitment and you don’t have to give up all future disposable income for 3-5 years. 

But what if you do not qualify for a Chapter 7?

Then you would most likely file for a Chapter 13 bankruptcy.

A Chapter 13 bankruptcy involves paying your creditors back over a period of 3-5 years.  You take your monthly expenses away from your monthly income, what is left over is called disposable income. 

The entirety of that disposable income, a minimum of $100 will get paid to your unsecured creditors. 

At the conclusion of your 3-5 year period, what they have received is all that they get and the rest of the unsecured debt is discharged.  If you pay your creditors back in full prior to the 3 to 5 years finishing, than your case closes since there is no longer any debt to administer.

You only want to file a Chapter 13 bankruptcy if either you can’t use Chapter 7 or a Chapter 13 would give you an advantage.  A Chapter 13 must be used if you make too much money under the means test to qualify for a Chapter 7 bankruptcy or you have filed a Chapter 7 bankruptcy within the last 8 years. 

You gain an advantage from filing a Chapter 13 bankruptcy if you need to catch up on back mortgage payments or you have certain tax or domestic support debts.  There are other reasons to file a chapter 13 and I would strongly recommend consulting a licensed bankruptcy attorney if you are contemplating filing.

One last important difference between these two chapters of bankruptcy is what happens if you want to quit the process. 

A Chapter 13 bankruptcy is a form of voluntary repayment, which you can stop at any point.  There will be no penalty, just all the debts will once again come due and you will have lost the protection of the automatic stay. 

A Chapter 7 bankruptcy is a liquidation form of bankruptcy and once initiated continues until the Trustee is finished.  This is true even if you voluntarily give up your right to a discharge, fail to make a payment, or fail to take the required classes.  You have the right to give up your discharge, but that does not prohibit the Trustee from continuing to administer your estate and sell your non-exempt belongings. 

Bankruptcy should only be filed if you are aware of the risks and benefits.   Most bankruptcy attorneys offer free one hour initial consultations, I’d urge you to call one in your area before deciding which chapter to file.

Are there alternatives to bankruptcy?

Yes.  You may qualify for:

Debt Management or Debt Settlement

Call today for a FREE CONSULTATION.

Written by Noah Bishop of Gresham Family & Bankruptcy Law