Do You Have Too Many Debts?

With the excess lending practices of the last few decades, before the recession caught up to us, many people have found themselves in deep waters financially. After all, it’s easy to spend money offered to you today that you hope to have in the future to pay back. But what if that money offered gets you so far into debt that you can’t see the light at the end of the tunnel? Whom can you turn to for help with your debt?

When it comes to handling your debt, you have options to help you create a repayment plan. You can go with debt consolidation, use a debt management company, or make your own arrangements for repayment. When considering those options, there are some things to keep in mind. Know your exact amount of debt and if it’s an amount you can handle by yourself. Decide if you are willing to pay for financial expertise and how much. Understand how it will affect your credit.

If you decide you can handle it on your own, you will need to contact all your creditors yourself to make payment arrangements. Many creditors, especially credit card companies, will work with you and may offer settlement arrangements that can lower the amount you owe by up to 50%. The drawback to this is that it will have a negative effect on your credit report, but less so than bankruptcy would. However, it could save you enough money to pay off other debts that would otherwise have to wait.

A debt management company can be a great tool to get debt under control. A debt management company will examine your finances and create a DMP, or debt management plan for you, contact your creditors for you to work out a repayment plan, and help you determine an amount you can pay each month for your debts. This amount will go either into a special account or directly to the debt management company to pay on your behalf. Fees charged by debt management companies vary and some are less than reputable, so be sure to research the company and examine any agreements they offer.

Debt settlement companies specialize in working with creditors and negotiating low settlement amounts. They can likely work out a much better settlement than you could on your own, saving you even more money over the long haul. Their services are not free though, and what they charge will vary from company to company. You want to find a company that is reputable, listed with the Better Business Bureau, accredited, and that won’t charge any large, upfront fees. Find one that won’t charge you until your dept is paid or one that only charges a small monthly fee.

Whatever method you decide to use, take steps to keep yourself from falling into the same spending habits in the future. While a debt management company can give you financial counseling, you can easily examine your own finances and discover many ways to keep you out of debt in the future.

Read On : Debt Help

One should always first consider alternatives to bankruptcy.

Within 180 days of filing for bankruptcy, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act makes it law that an individual must get some form of credit counselling.

By having counselling, an individual is made aware of the alternatives to bankruptcy, which may be suitable in their case.

Of the many versions of bankruptcy, chapters 7 and 13 are probably the most well known.

Chapter 7 is often regarded as being the best option. The downside is that most all personal assets have to be sold, including any familly home.

However, after all relevant assets have been liquidated, any outstanding debt (there are exceptions, such as tax), is cancelled, allowing a totally fresh start.

If an individual does not want to be forced to sell all their assets, chapter 13 bankruptcy removes this need altogether, by putting in place a repayment plan, debts being paid in full over a 3 - 5 year period.

The changes brought in in the 2005 legislation means that all applicants for chapter 7 bankruptcy have to undergo a means test, to ensure that they genuinely cannot work out a repayment plan.

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Given the complexities of filing for bankruptcy, including deciding the best type of bankruptcy to apply for and filling in the initial legal means test, a lawyer is essential.

Appointing a lawyer instantly triggers what is called “automatic stay” and is a form of protection from creditors in that they can thereafter no longer pursue you directly for payment of debts - they have to deal directly with your lawyer.

One of the first things you have to do is supply a list of both debts and personal asets to the court. You will then be recorded answering a series of questions, on oath, at what is called a “Creditors Meeting” where the truth behind your financial submission is verified.

In a chapter 7 case, the court decides whether there are assets that can be sold to pay creditors. Once these assets are sold and the money distributed amongst the creditors, any outstanding debts are wiped out.

The situation is different in a chapter 13 filing, in that a 3-5 year repayment plan is introduced to pay off all your creditors, based on the result of your means test.

Under chapter 7, bankruptcy is discharged and notice issued a few days after the 60th day after the Meeting of Creditors, as long as no petitions have been made to the court challenging the discharge. Any challenges must be made not before the 60th day. Under chapter 13, the bankruptcy is discharged and notice issued some 30-60 days after verified completion of the repayment plan.

If you are thinking about how to claim bankruptcy, I strongly advise have a look at www.howtoclaimbankruptcy.net for more free information, including advice on how to restore your credit score after bankruptcy has been completed. This article, A Guide On How To Claim Bankruptcy has free reprint rights.

If you are one of the over 100,000 American homeowners to receive a Notice of Default last month - well, at least you are not alone! The Notice of Default (NOD) is the official start to the foreclosure process. It probably was not a surprise to you, as it usually takes about 90 days of delinquency before it is issued. But, it’s always a shocker, and never a welcomed event. This foreclosure process that you are now in will protect you even while it humiliates you.

Don’t resent it. That’s a waste of time. And, no one cares! Instead, view it as an opportunity to negotiate a workout that will work. In 2010, to stem the rising tide of foreclosures, the government is pressuring banks to modify hundreds of thousands of mortgages. But, to no avail. Consequently, you have to be street-smart and tough as nails to get a trial modification. And, the majority of trial modifications are not being made permanent. So, you have to be persistent. Don’t settle for anything less than a real fix - a mortgage modification arrangement that you can live with. You need a solution that will get you through this economic mess of the next few years.

Everyone who get an NOD asks:

What do I do next?! How can this get any more embarrassing? What are my options? What are others doing? Who can help me?

Those are reasonable. But, you should also be asking:

What are the tax implications of foreclosure? Can I get sued for the shortfall? How can I minimize the damage to my credit score? And, oh, yes…should we even fight to stay in this home or should we just let the bank have it?

Your situation is unique, but quite predictable. You’ll be amazed at how many similarities you have with more than 100,000 other Americans who also received the NOD last month. Get information from a trustworthy source. Go beyond the generic “vanilla” advice from non-profits and from the banks. Get smart help from loan modification experts with a good track record of success.

Want more information and help getting Mortgage Modification? Visit Rockwood’s site about DIY Loan Modification at Home Loan Modification This article, Take That Notice Of Default And is available for free reprint.