For Most People With Debt Problems - Bankruptcy Helps Your Credit
BANKRUPTCY USUALLY HELPS YOUR CREDIT
Most people think filing Bankruptcy will be the death knell of their credit. In my practice as a Bankruptcy Attorney, it is the single most common concern holding people back from the Financial Freedom they so desperately want and truly deserve. I have represented people who went through traumatic events, which produced large amounts of debt, 20 or more years ago, and they are still paying those debts because they fear the consequences of Bankruptcy.
The events which cause these debts are very common and, at one point on another, touch the lives of most people. It can be a divorce, health problems, prolonged unemployment or legal problems. The list is endless but then result is the same: overwhelming debt obligations.
When confronted with overwhelming debt, the best solution for most people, is Bankruptcy. As this article, on Nerdwallet.com, states, the "rate of recovery" from Bankruptcy is rapid. Until you understand the true Benefits of Bankruptcy, which we explain in this article, you are missing out on one of the best kept secrets to effectively deal with your Financial Problems. Bankruptcy is a Solution which can Transform your Life and make your future bright and rewarding.
BANKRUPTCY HELPS MORE PEOPLE THAN ANY OTHER METHOD OF DEALING WITH DEBT
Regardless of how much unsecured debt you have, if you don't have the income to pay it off in a relatively short period of time, Bankruptcy is probably the best way to deal with your financial problems.
DEBT CONSOLIDATION LOANS USUALLY JUST CREATE A NEW PROBLEM
A debt consolidation loan usually just transfers credit card debt to an installment loan which often times has interest rates comparable to credit cards. Moreover, it usually extends the length of the repayment period. Furthermore, having this massive debt on your credit report drags down your credit score and, in essence, prevents you from engaging in any constructive credit transactions like buying a home. Finally, and most important, servicing the Consolidation Loan by making the monthly payments, prevents the debtor from saving money and planning for the future.
Bankruptcy can, under Chapter 7, eliminate some or all of your debts immediately without any repayment. It allows you to start saving and moving forward NOW. Not in 10 years as may be the case with Debt Consolidation. Moreover, it eliminates your stress NOW. Finally, the hit to your credit from Bankruptcy will probably be no more drastic than carrying around a huge consolidation loan and the recovery time for your credit will be less. As the Experian Credit Bureau states in this Article, although a Chapter 7 stays on your credit report 10 years, the negative connotations lessen over time. And, the elimination of debt on your credit report offsets the negative aspects of the Bankruptcy.
DEBT CONSOLIDATION PROGRAMS USUALLY DON'T WORK
Debt Consolidation Programs are probably the single worst way for most people to deal with debt problems. Here are some reasons why it is such a bad thing:
1. Creditors don't have to accept the Consolidation Program;
2. Creditors who don't accept the Consolidation Program can sue you and garnish your wages;
3. You usually continue to pay interest and fees on the balances;
4. Late payments continue to accrue on your Credit Report.
5. You may receive a 1099 for any debt which is forgiven and you may have to pay Income Taxes on that amount;
6. The debt will NOT show on your Credit Report as being Paid in Full but will state the account was settled for less than the full amount;
7. Each account will continue on your Credit Report for 7 Years from the date of the last payment;
8. Creditors can usually back out at any time or if you miss or are late on a payment;
9. You usually can't borrow money while in the program;
10. Creditors can continue to contact you directly and can call your home and your place of employment.
CHAPTER 13 BANKRUPTCY IS FAR BETTER THAN A CONSOLIDATION LOAN OR A DEBT CONSOLIDATION PROGRAM
If you are thinking of signing up for a Debt Consolidation Program, You Need to Consider Chapter 13. Here are some of the innumerable benefits Chapter 13 can give you:
1. If the Court approves your Chapter 13 Plan, Creditors must accept it and can't back out;
2. An Automatic Stay goes into effect the moment you file Chapter 13 Bankruptcy and Creditors can no longer contact or bother you or your Employer;
3. The Automatic Stay applies to Student Loans which can go into collection when the moratorium ends in less than 6 months according to this New York Times article;
4. There are no Tax Consequences to Chapter 13 as Discharged Debts are not taxable;
5. No more interest or late fees will accrued on dischargeable unsecured debts like credit cards, payday loans and medical bills;
6. Most Debtors only pay back 1 penny on the dollar. So, if your case is a 1% case and you owe $100,000 in unsecured debt, you will only pay back $1,000;
7. No more late payments will accrue on your Credit Report;
8. The entire unsecured debt will be shown as Discharged in full after your Chapter 13 is Discharged;
9. If you need to borrow money while in a Chapter 13, you may be able to do so with the Bankruptcy Court or Trustee's permission;
10. The Chapter 13 will only stay on your Credit Report for 7 years from the date your case is filed.
REGARDLESS OF WHICH BANKRUPTCY CHAPTER YOU CHOOSE, IT WILL HELP YOU AND YOUR CREDIT RECOVER
Bankruptcy will provide you immediate relief from financial stress. It will either eliminate your debt immediately or will allow it to be eliminated over a period as short as 3 years with payments you can afford based on your budget. It will improve your Credit and will allow you to start building a strong financial future. You can even be approved for a Home Mortgage shortly after filing Bankruptcy. As this article from Lending Tree explains, you can be approved for a government-backed mortgage in as little as 1 year after a Chapter 13 Bankruptcy Case and as little as 2 years after a Chapter 7 Bankruptcy Case.
In short, Bankruptcy Will Make Your Life Better.
CONTACT US FOR A FREE CONSULTATION
If you are facing financial problems, you need to consider the options available to you in Bankruptcy. Please call (513) 528-0200 or send an email to Info@CincinnatiBankruptcy.com. You can also contact us through our website.
I look forward to helping you,