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Bankruptcy Alternatives Information

For many people who are struggling with massive amounts of credit card debt and unexpected expenses, such as unforeseen medical bills and mortgage increases, many people automatically think of bankruptcy However, bankruptcy which is a federal court process designed to help individuals in need to fully or partially eliminate their debts and get back on their feet, is not always the most reasonable and efficient way to climb out of debt and regain financial stability.

The debt relief bankruptcy alternative is not for everyone. There are lasting financial repercussions to filing for bankruptcy (i.e. your credit score is crippled for several years after your filing) and a strict financial plan is required in order to successfully go through the process and take advantage of the debt relief benefits it offers. Thus bankruptcy is often something that should be undertaken only as a last resort measure, once the other bankruptcy alternatives have been explored.

The first step if you’re thinking about filing for bankruptcy is to educate yourself on your options. On this website I provide you with information on bankruptcy and bankruptcy alternatives in order to help you better decide whether bankruptcy is right for you. In many states, a pre-bankruptcy counseling session with a qualified financial advisor is mandatory for all individuals and businesses wishing to file for bankruptcy. It’s not a quick and easy process like it used to be due to the changes implemented in the Bankruptcy Reform Act of 2005. If you’re interested in speaking to a financial expert about the best bankruptcy alternatives, complete the contact form on this page now. I can help you find an honest debt relief company that can provide you with the financial guidance you need to get the most out of this challenging process and to help you make the decision based on what‘s best for you and your situation.

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Other Bankruptcy Alternative Articles

Can I File Bankruptcy?

: March 15, 2007 5:01 pm : Bankruptcy Alternative

There are 2 common types of bankruptcy, chapter 7 and chapter 11. The new bankruptcy laws (actually almost 2 years old now) make the common practice of filing chapter 7 bankruptcy much more difficult. Prior to the new laws, for most people who asked “Can I file bankruptcy?”, the answer was a resounding “yes, no problem, file a chapter 7”. Chaper 7 bankruptcy allowed you to basically wipe out your debts and start with a clean slate without too much hassle provided that:

    1. You had few assets or you were willing to sell much of what you had in order to pay back as much debt as possible (including your home and cars)

    2. You were ok with the fact that bankruptcy would destroy your credit score which means a long (very long) process of rebuilding your credit (no home or auto loans for a long time without huge interest rates)

For many people, this was a good solution because is was relatively fast and easy way to unload your debts, especially if you did not own a home.

Now the new laws force most people into chapter 13 bankruptcy, which is more like a debt management program that allows you to keep you home and cars assuming you can make those payments but it puts you on a strict budget forcing you to repay your debts in up to a 5 year court ordered program.

Each state has minimum income requirements that, if you exceed and you have at least $100 in discretionary monthly income (extra spending money after your essential bills are paid), will result in the court system forcing you into the chapter 13 vs. a chapter 7. The requirements in your state will be the key determinant in helping you answer the question “can I file for bankruptcy?” or if you’d be better off with a bankruptcy alternative.

In other words, you need to prove that you are struggling financially to the point where your income does not even cover your essential weekly bills in order to qualify for the faster chapter 7 bankruptcy option. As a result, many people are turning to debt settlement companies to lower their payments through a debt negotiation process.

The days of having lots of debt one day and then using chapter 7 bankruptcy to wipe them out the next, is not nearly as easy as it used to be.

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Should I File Bankruptcy vs. Using a Bankruptcy Alternative?

: February 18, 2007 10:21 am : Bankruptcy Alternative

As discussed, filing bankruptcy is no longer as simple as it once was. However, to some people in very bad financial situations, it often is the only option after exhausting all other bankruptcy alternatives.

“So When Should I File Bankruptcy?”

Honestly, every situation has to be evaluated on its own terms but in general, if you are facing huge amounts of debt and your income is either tiny compared to your monthly payments or you have no income at all, then bankruptcy may be your only option. Your ability to qualify for the faster and easier chapter 7 bankruptcy also depends on what state you reside in.

The most common bankruptcy scenario involves medical bills which can pile up suddenly and dramatically after an unexpected illness or accident. A person without adequate health insurance who suddenly falls very ill, can rack up medical bills in the tens or hundreds of thousands of dollars in a relatively short period of time.

This situation is one where bankruptcy can be inevitable. However, if you just find yourself in debt as a result of spending more than you can handle and have racked up excessive credit card debt you want to look into debt settlement if your debt is over $10,000 or debt management if your debt is less than $10,000.

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What’s the Effect of the New Bankruptcy Laws?

: February 18, 2007 10:07 am : Bankruptcy Alternative

The bankruptcy laws were changed in 2005 in an effort to curtail the number of people who file for bankruptcy as a way to release themselves from the responsibility of their debt. Many people and apparently the government as well thought that it was too easy to file for bankruptcy.

As a result, the process now involves more legal hurdles, time delays, increased paperwork and documentation, and mandatory credit counseling. In short it is no longer easy nor as quick of a process as it was before AND it still has the huge long term negative consequences on your credit worthiness and future financial flexibility.

Now more than ever, bankruptcy really should be a last resort only for the most desperate of situations. If you have any chance to solve your debt problem with debt settlement or debt management then you should explore those routes first.

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What Are the Benefits of Debt Settlement vs. Bankruptcy?

: January 30, 2007 11:55 am : Bankruptcy Alternative

When weighing the choice of debt settlement vs. bankrutcy, you need to consider the law. Debt settlement has become even more attractive as an alternative to bankruptcy due to the new bankruptcy laws which make it much harder to file and wipe out your debts. The process used to be much quicker and simpler leading many people to file bankruptcy and start over instead of working off the debt through debt settlement or debt management consolidation services.

Given the new reality (ie-laws), debt settlement can offer these advantages vs. bankruptcy:

    1. You can typically rebuild your credit faster
    2. Bankruptcy is no longer a simple way to wipe your financial slate clean so you still may be required to pay back some of the debt you owe depending on your situation
    3. You still will likely have to incur legal fees with bankruptcy due to the new laws that complicate the process more than before

And most importantly, with debt settlement you will not have to check “YES” when an application asks you “Have you ever filed for bankruptcy?” It’s the dreaded question that nobody wants to have to answer affirmatively. You should avoid it if at all possible.

In both cases your credit suffers

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How Do I Avoid Filing Bankruptcy?

: January 15, 2007 12:29 pm : Bankruptcy Alternative

Bankruptcy is really a last resort. You want to avoid filing bankruptcy as much as possible especially now that the new bankruptcy laws have made it so much harder to file and wipe your debt slate clean quickly.

The debt settlement option as discussed here is the bankruptcy alternative that most people with lots of unsecured debt use. To qualify you must:

  1. Have unsecured debts (explained here)
  2. Have some income to make the reduced debt payments
  3. Have at least $10,000 in unsecured debts

With debt settlement you are able to drastically reduce the amount you owe without having to go through most of the new legal hurdles of bankruptcy. They decrease your monthly payments and typically have you out of debt within 3 years.

Of course, debt settlement can have its drawbacks but if you are facing bankruptcy and meet the above criteria, it often is a much better option for many people.

Find out for yourself, call one of my suggested Debt Settlement Companies for a free consultation. Get all your questions answered and then you decide if their debt settlement program is right for you as a bankruptcy alternative.

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