Alternatives to Bankruptcy for Debt Relief
What bankruptcy alternatives are there for debt relief?
I filed chapter 13 bankruptcy and got behind on my payments. What bankruptcy alternatives are there for debt relief. The bankruptcy court sent me a letter saying they are going to dismiss my bankruptcy case if I do not pay what I am behind in 30 days. If they dismiss my bankruptcy is there still any debt consolidation relief available?
Thank you for your question. First, I want to assure you that you are not alone; many consumers find themselves buried in debt before they even realize what happened. You do have options. Now, on to your question.
A Chapter 13 bankruptcy is a reorganization of your debts where you make monthly payments on a pay down plan (typically 5 years). If you break your Chapter 13 payment plan, as many people do, then your creditors essentially drop out of the plan and can come after you (or apply existing judgments that were entered).
If your financial situation has gotten even worse than when you filed the Chapter 13, I recommend exploring a Chapter 7 bankruptcy (see your bankruptcy attorney) or seek a free debt consultation. If you follow the links below, I can put you in contact with a company that may be able to assist you in resolving these debts.
Quick tip #1:
Very quickly, you can get a free debt consultation with one of Bill's approved debt help partners.
if you own a home, a secured debt consolidation loan may be right for you. this type of loan is essentially a home equity loan which is used to pay off your other creditors. secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount.
unsecured debt becomes secured debt
be careful before you borrow money against your home to pay off credit cards and other unsecured loans; you will be converting what was previously unsecured debt into secured debt. this could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. however, secured debt consolidation loans work for many people, so this is an option to consider carefully. however, since you recently filed bankruptcy, even if you have equity in your home, you will find it difficult to refinance. if you want to speak with a mortgage lender, to see if refinancing is an option, contact one of bills.com's pre-screened mortgage lending partners.
another option to consider is a consumer credit counseling service, or cccs. cccs companies offer numerous services, such as financial counseling and budget planning, as well as debt management plans (dmps). in a dmp, the cccs arranges a new payment amount with each of your creditors, usually based on a reduced interest rate. you then make a single monthly payment to the cccs , which distributes the funds to your creditors, based on the new payment amounts.
drawbacks of cccs
there are several drawbacks to cccs, though. first, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. second, it has a negative impact on your ability to obtain a loan. you may not wish to enter into a dmp if you anticipate any large purchases, such as home or an auto, in the near future. third, the average dmp takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan. fourth, dmps have a high dropout rate.
you may also want to consider the services offered by debt settlement firms. rather than making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts by 50% to 60% of your principal balances. these programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. in most cases they can also greatly reduce your monthly payment.
there is one major drawback to debt settlement programs. they significantly damage your credit while in the program and for at least a year after. however, if getting out of debt is more important to you than the hit to your credit, debt settlement may be your best choice. because of your financial difficulties, you may want to stop focusing on the importance of your credit score. a debt settlement program is probably the fastest way to resolve you debts, outside of bankruptcy. once you repay your debts, you should be able to rebuild your credit score through careful management of your credit accounts.
i hope that one of the several options i have described above may be able to help you.
i encourage you to explore the bills.com website, to read more about the debt help options available to you.
i hope this information helps you find. learn. save.