Is Bankruptcy better than Debt Settlement?
Date: Sun, 06/03/2007 - 18:40
Bankruptcy is not a "safe" option. It is damaging to your entir
Bankruptcy is not a "safe" option. It is damaging to your entire lifestyle, your credit, etc. The days of saying "I can just file Chapter 7 and wipe out my debts" are over. You will have to go through the means test with a BK attorney, and you will be informed what Chapter you can file for - chances are good it will be Chapter 13, which will force you into a payment plan that can last 3 to 5 years. This payment plan will take the "disposable income" determined by the means test and apply it to your debts - but the attorney gets paid first - and prepare to pay a LOT to the attorney. It may take most of the first year of your plan to pay the attorney off, depending on your income and the amount of your payments.
Now for the other part of Bankruptcy. Your credit will be hit hard by the bankruptcy for a number of years. For the length of your plan, anything you purchase over a certain amount (like a car) will have to be approved by the Trustee. Your income will be drastically affected by the payments to the plan, which will be garnished from your paycheck automatically to ensure the payments are made on time. And bear in mind, when you file for Chapter 13, and those payments start getting garnished from your paycheck, lowering your income, your bills don't stop coming in. You still have to pay your utility bills, any medical bills that come up, car repairs, etc.
I'm not saying bankruptcy isn't a valid option - it is sometimes the ONLY option available. But if you are not in danger of losing your home to foreclosure, or you haven't totally lost your ability to earn a living, you may want to check into debt consolidation or settlement instead.
debt consolidation5 or settlement is definitely a better idea - especially if you research the firm you're looking at using. Check with the BBB, research them online to see if anyone has complained about their services, and ask around town - see if the company will give you references from local folks that have used their services and are satisfied.
