What can you do if your debts are too large to manage?
Situations do exist where people accumulate so much debt that it becomes unresolvable through practical means. In these settings, strategies like eliminating expenses and getting interest rate reductions just do not work. Furthermore, each month your debts are not paid according to terms, the deficit grows greater through late fees, and this unbeatable cycle quick leads to thoughts of filing for bankruptcy.
The United States placed the bankruptcy laws under the federal system; however cases, claims, and exceptions depend on the state law systems. If you choose to file for bankruptcy, the government requires creditors and collection agents to recognize that you are unable to repay your debts through the Means Test. If your bankruptcy is filed, then all collection actions must cease immediately which can include the prevention of home foreclosures, car repossessions, and other aggressive collection practices.
Bankruptcy is one option
To a person who has been struggling against debt for an extended time, this can look like a quick and easy escape from the financial misery. However, to someone who is more concerned with rebuilding their future, the idea of bankruptcy can be terrifying due to the requirement of surrendering or selling certain possessions to cover the outstanding debts as well as losing all credit cards. Other difficulties are experienced when trying to get obtain certain types of jobs, and when seeking life insurance policies.
Do alternative debt relief programs exist outside of bankruptcy?
Alternatives to bankruptcy are strategies called debt consolidation and debt settlement. Consolidation will include the refinancing of your debts by rolling them together. In other cases, settlement may become a more viable option based on one’s inability to repay the monthly payment offered via consolidation. If you’re seeking debt consolidation, this is accomplished by partnering with a lender who will deem you credit worthy and extend a loan to roll all the others into one. However, if debt settlement is your preference, you will need to speak to a debt settlement company who can advise you on a new set-aside amount, which will be aggregated over time in order to both negotiate and settle your original debts. This method requires that you can afford the new payment structure even before considering this debt relief method, so be sure to speak with a reputable company who has previously executed successful plans.
Each New Year is celebrated for new opportunities and a fresh start. If you find yourself overwhelmed by debts and expenses today, remain focused on starting the New Year by creating new spending habits and practicing better financial management skills. However, if you’re underwater and need a financial rescue, be sure not to waste 2016 without reaching out to those who are available to help you. Call Brownstone Law Group today to receive a free and confidential consultation, and discover a roadmap to make 2016 your best year yet. 619-485-3045
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This article has been reviewed and approved by Thomas A. Moore, managing attorney Brownstone Law Group, PC. California Bar # 148698. This article is for informational purposes only, does not provide legal or tax advice of any kind or form any type of attorney/client relationship. This article was published on February 25, 2016.