Having mounting bills and obligations that you are unable to pay can be a vexing and overwhelming feeling. Not knowing how to best resolve your financial problem might only compound the situation. While many have turned to bankruptcy for a fresh financial start, few people realize that there are other options that may be a better fit for their circumstances. Specifically, there are a number of debt relief services which use a variety of methods to resolve financial shortfalls. Here’s an overview of those debt relief options and some insights on bankruptcy to help you decide which may be the better option for you.

Debt Relief

While there are many services advertising debt relief, the phrase does not have one singular meaning. The truth is that debt relief can include a number of pre-bankruptcy practices designed to reach the same common goal – eliminating or reducing debt. A few common forms of debt relief are:

• Debt negotiation
• Debt settlement
• Repayment plans
• Debt consolidation
• Credit Counseling Services

The benefit of debt relief is that you may avoid long-term damage to your credit score. You might choose to work with your creditors to develop a repayment plan. You might choose to negotiate and settle your debt before your credit has been negatively affected. Either way, those methods can be a superior option to filing for bankruptcy. However, those methods assume that you have some form of income to make payments on the consolidated or negotiated debt. Additionally, unless you come to an agreement with your creditors before missing payments, your credit score will likely take a hit. Still, the negative impact to your credit may not last as long as bankruptcy, and if you make enough timely payments, your creditors may agree to remove any negative remarks from your credit report.

Bankruptcy

Like debt relief methods, there are a few different types of bankruptcy. The most common forms of consumer bankruptcy are Chapter 7 and Chapter 13. Most consumers opt for Chapter 7 as it may allow for the discharge of some unsecured debt. However, Chapter 7 bankruptcy will negatively affect your credit score and does not get removed until ten years from the date of filing. Further, to be eligible for Chapter 7, your income cannot exceed a certain amount.

It is common for consumers to not qualify for Chapter 7 due to their income. In this case, they opt for Chapter 13 bankruptcy. This form of bankruptcy requires debtors to enter into a three-to-five year debt repayment plan in an effort to pay back some of their debt. Because of this, Chapter 13 is suitable only for those who have income to make those payments. However, because Chapter 13 requires monthly payments and may not discharge debt, the hit to your credit is less than Chapter 7. Additionally, Chapter 13 only stays on your credit report for seven years, not ten years which is the case with Chapter 7.

Additional Considerations

Bankruptcy is not something you should pursue without careful consideration of your circumstances. An experienced bankruptcy attorney can make clear for you whether bankruptcy is appropriate for your situation. They can ensure that you are aware of all of your options and can recommend the best financial path forward for you and your family. Deciding to file for bankruptcy is a big deal. This is not something that you should enter into lightly. An experienced bankruptcy attorney can help ensure that you know your options. They can help you pursue the best financial path towards getting out of your financial jam. Whether you are considering filing for bankruptcy, modifying your mortgage, or are just suffering from unmanageable credit card or student loan debt, The Bankruptcy Team, PLLC is here for you.

The Bankruptcy Team, PLLC is devoted to assisting clients resolve their financial problems through bankruptcy, foreclosure or other legal avenues so that they can get the fresh start that they are entitled to. We also aim to protect those who have been exposed to unfair debt collection practices such as repeated phone calls, abusive and threatening language, and the use of deceptive methods. Our experienced attorneys will thoroughly review your situation and advise you about available options that closely fit your needs and which protect you from bad debt collectors. To consult with The Bankruptcy Team, PLLC, call or contact us today.