Before You File for Chapter 13, Read This
Beaten down by debt? Considering filing for bankruptcy? You should must know that you have another choice. This article will look at the differences between debt settlement and bankruptcy and how you to find out which option is the the best for you.
Bankruptcy offers relief to people devastated by debt by discharging their finance needs. However, as agreed by a tougher bankruptcy law effective October 2005, very few people qualify for chapter seven bankruptcy. In chapter 13, the court decides the monthly amount you have to pay according to allowable living expenses, which are not determined by your actual expenses, but by IRS schedules.
You can discover what type of bankruptcy you qualify for by reading the current bankruptcy code which can be found in the internet, but unless you are familiar with complex legal language, you’ll be better off reading a good book on the topic. In addition, bankruptcy may affect future roles and loan applications.
Debt settlement, often referred to as debt negotiation, requires negotiating with creditors to settle for 50% or less of the sum owing. With debt negotiation you have two options: hire a debt settlement company and be ready to pay at least 15% of your total debt or do your own bargaining with the help of a reputable coaching course and pay a little fraction of what you would pay a debt settlement firm.
Unlike bankruptcy, debt settlement isn’t a matter of public record and negative information stays in your credit report for at least 7 years, but you can rebuild your credit in one to two years, the payments are flexible and are managed by you, not by the court. The length of chapter thirteen is five years with fixed payments dictated by the court, the length of a debt settlement program, depending on your monthly budget and other monetary factors, is from half a year to 3 years.
As you can see, these are just the main differences between debt settlement vs bankruptcy. However if you prefer to go with debt negotiation, is best to find out more details about the do it yourself approach and the debt settlement firm. Hopefully, this can help you in your quest to dump your debt and make a last call as to what program is best for your particular situation.
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