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from: One Bankruptcy Alternative is Credit CounsellingDespite of heavy debts many are quite hesitant to file for bankruptcy. The reason? Bankruptcy remains in your record for more than 10 years!
More often than not, one of the best alternatives you can choose from is through credit counselling. It is possible to avoid bankruptcy, even when you are badly in debt, when certain conditions can be justified.
First condition is if you earn enough income to pay your present monthly liabilities and your debt payments, but have fallen behind because of high interest rates or a one-time financial emergency, then it might be possible to avoid bankruptcy.
Also, if your secured debt such as your mortgage and car payments are current and it is the unsecured debt wreaking financial havoc, then credit counselling may be a good choice. There are numerous good reasons why you may consider seeking credit counselling.
Getting into credit counselling might be sometimes costly and you should be careful with the company that you choose since it will be a large deduction to your money on hand when they charged high fees and you get to pay them instead of your debts. You can find many different types of credit counselling agencies, nonprofits and for-profit businesses. The best place to start when looking for a reliable and experienced credit counsellor is with a bankruptcy attorney.
You and your bankruptcy attorney should, beforehand discuss if it is the credit counselling that you should pursue instead of filing bankruptcy. Credit counselling is usually only suggested instead of bankruptcy when two conditions can be met.
First, you can budget your money and follow to a repayment plan. Second, you only need to get interest rates lowered on unsecured and maybe some of the secured debt in order to get your payments lowered.
All your income and debts would be reassessed when you have a credit counselling. You will be given a counsellor your will in turn, contact and negotiate with your debtors. Usually, high interest rates on credit cards can be reduced and the credit card companies agree to accept lower payments.
In some cases, even secured debt payments can be lowered, because a company would rather not repossess personal property if at all possible since it will ad to their dead assets and will take time before it can be realized to monetary value. Normally though, only unsecured debt is included in the repayment plan. Once the counsellor has obtained the new payment amounts, a total monthly sum payment is calculated which includes a fee. You then pay that one amount to the credit counselling agency which distributes the payments to the credit card companies or other debtors.
Many have opt to go into a credit counselling instead of filing bankruptcy. And many find it a good alternative.
The credit management services are often able to negotiate lower interest rates so you can restore your financial health. It's always best to avoid bankruptcy if possible, yet when you need to actually reduce your debt, rather than just the payments, then bankruptcy is the best solution.
Seeking a professional advice, though may add to your expenses, outweighs the cost that it will mean to you and your effort can be rewarding. A bankruptcy attorney can review your financial status and advise you as to the best course of action.
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