- How to Get Out of Debt Fast - BigEddGuitar
Eliminating debt is a priority for any U.S. family that is struggling to keep up with debt repayments. Whilst filing for chapter 7 bankruptcy provides genuine debt relief help, it shows on personal credit reports for 10 years, appears in the local paper and makes it more difficult to work in certain professions. There are several bankruptcy alternatives that can help to deal with serious debt problems.
How to Get Out of Debt with a Debt Relief Program
- In order to get approval for an alternative to bankruptcy, that person will need to have defaulted on his/her credit agreements. If an account is up-to-date, the account won't have been sold to a collection agency. The sale of debt, for as little as 10 cents in the dollar, provides the scope for the negotiation and eventual debt reduction.
- A debt management plan and debt settlement program not only helps to pay off debt more quickly, they also achieve this objective in a fraction of the time. A single payment is made to an intermediary and they will distribute the proceeds to creditors.
- A bankruptcy alternative requires the debtor to make a reduced repayment to creditors each month so some disposable income must be available to contribute towards the arrangement.
- Filing bankruptcy may be more appropriate for the unemployed, low income families and those who don't have many non-exempt assets, such as a second home or collectibles.
Debt Settlement Program Provides an Alternative to Bankruptcy
An appointed intermediary negotiates with creditors to establish a reduction to the principal of between 25% and 50%. Although the debt reduction doesn't take place until the end of the agreement, the client makes a repayment based on this reduced amount for a period of 12, 24 or 36 months. It may be possible to extend a debt settlement program to improve affordability further, but this reduces the likelihood of creditor approval. There is a15% management fee.
Eliminating Debt with a Debt Management Plan
This bankruptcy alternative doesn't reduce the principal. Instead, the objective of a debt management plan is to improve affordability and simplify family finances. Following a budgetary analysis and creditor approval, the debtor makes a single monthly payment to an intermediary. This money will be disseminated to creditors on a pro rata basis. Should there be any unwelcome contact from creditors, this will be handled in return for a 15% management fee.
Bankruptcy Alternatives vs Filing Chapter 7 Bankruptcy
Filing bankruptcy means complete debt elimination in as little as 4 months with no repayments. However, under the 2005 laws, it won't be suitable for those who have filed in the last eight years. It also won't help people who work in certain professions, such as finance or law. Should there be non-exempt assets, they will need to be handed over to a trustee. A debt management plan and debt settlement program allow someone to eliminate debt at an affordable rate without any adverse publicity. However, an alternative to bankruptcy will not provide the same court protection from creditors.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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