Debt Relief or Bankruptcy?
If you are like other consumers, you face mounting debt problems and need to look at your options. The two main ones are debt relief and bankruptcy; here, we explore both options.
When faced with mounting debt problems, consumers often don’t know where to turn. Since it’s an ever-changing and serious issue, you need to consider all your options and choose the best one fitting your needs. At the same time, think of your future as it’s wise to find a solution that leaves you with a better financial future. With this in mind, you can consider debt relief or bankruptcy. Here is a short guide explaining your options to clean up your credit and enjoy a debt-free life.
Bankruptcy: If you owe thousands of dollars to your creditors, you need to consider bankruptcy. Consumers usually file for Chapter 7 or Chapter 13. With Chapter 7 bankruptcy, you can sell your non-exempt assets and wipe the rest of your debts off the books. However, it’s not always easy to qualify for Chapter 7, and you need to prove that you can’t repay the debt without unnecessary hardship. If you qualify, this is an excellent way to fix the issue quickly as you will keep your important assets such as your 401k, primary residence and automobile. If you don’t qualify for Chapter 7, consider Chapter 13 as this is another popular method. While not as easy as Chapter 7, this is a way to pay off your debts if you earn a decent income and are in substantial debt. With Chapter 13, you will repay your debts under a court approved plan. Once you repay your debts, you can exit bankruptcy with a new financial lease on life.
Debt consolidation: Now, while bankruptcy is an excellent and immediate way to enjoy financial relief, it has a couple of major downsides. For one, when filing for bankruptcy, your credit score will suffer for a long time. In fact, if you want to buy a house after bankruptcy, you will need to wait at least a few years to qualify for a loan. Furthermore, if you enjoy a decent income, you may not qualify for bankruptcy. When faced with mounting debt, you need to consider debt consolidation. With a debt relief program, you can take out a low-interest rate loan and repay all your creditors. With a debt consolidation plan, you will only need to send in one monthly payment and can watch as your credit score rises over the next few months and years. Since it’s not difficult to qualify for a debt relief program, it’s an excellent and viable option for a consumer with a decent income who wants to repay his or her debts in full.
When facing mounting debt, don’t panic. Consider either bankruptcy or a debt consolidation plan for cost, benefits, and the option best for you.