debt consolidation grants
Debt Relief Using Government Grants or a Debt Consolidation Loan
Handling Debt Through Settlement
A lowered economic situation and the explosion in the real estate market bubble has forced borrowers to the breaking point so they aren’t able to make the payments on their credit cards and consumer debt. For people in this situation trying to find a way to fix their problem, they often decide the only thing they can do is decide between assorted debt relief possibilities. These possibilities include counseling, debt consolidation, bankruptcy, and settlement. Out of these, debt settlement and filing for bankruptcy are what most people chose because of the pros in regards to getting rid of their existing payments and the amount they can reduce their existing debt.
Bankruptcy is most commonly filed as a chapter seven or chapter thirteen. A chapter seven is the superior option, with debt being reduced or even dismissed entirely in some fortunate cases. However, it’s not up to you to decide what chapter you file under! Since 2005, significant legal revisions have made it so that the court decides which chapter a bankruptcy is filed under, not the debtor. A means test, which is the first procedure to start up a proper bankruptcy filing, evaluates your income and expenses versus the standards for redeeming the debt. Falling short of the IRS-set standards of the means test will allow you to file a chapter seven. However, if you can even pay as little as a hundred dollars monthly towards your debt, then you will have to deal with a chapter thirteen filing instead.
A means test is basically something that evaluates how much money a filer makes and what kind of expenses he has. This is then measured up next to debt consolidation standards decided by IRS regulations. Based on these regulations, if the filer doesn’t meet up to the income guidelines, he is allowed to file for bankruptcy under the auspices of chapter 7. But, it takes meeting very strict guidelines to get a chapter 7. If the means test says the person is able to put as low as $100 to pay off the bills, then the person will be given the option of filing for a chapter 13 bankruptcy. In both scenarios, the borrowers must pay for and receive credit counseling and budget analysis. Even though Chapter 13 allows a bit of relief on a person’s monthly bills, it’s not as generous to consumers as Chapter 7 and has several disadvantages that make a lot of borrowers decide they don’t want to go with this method. The main negative of a Chapter 13 is that after the terms of the filing are set, the borrower’s finances may be ruled over by a trustee of the court. Most people don’t like to have an outsider involved with their finances all the time, so this makes getting a Chapter 13 very unsatisfactory and usually the borrower decides to try debt settlement instead.
In either case the petitioner is required to attend credit counseling and budget analysis at their own expense. Chapter 13 filings do provide relief on current payments, but is not anywhere near as consumer friendly as Chapter 7. It also carries other disadvantages, such as having the petitioner’s finances overseen by a court appointed trustee. The invasiveness of Chapter 13 filings very often turns consumers towards professional debt settlement services.
Professional Debt settlement, also known as debt negotiation, is a aggressive form of debt relief providing advantages over debt counseling, debt consolidation, or bankruptcy filings. The immediate advantage is the approximate 50 percent reduction on payments to each account included in the debt settlement program. Accounts eligible for inclusion in debt settlement programs include bank credit cards, unsecured bank loans, department store debt, unpaid utilities, medical bills, and other forms of unsecured debt. By being proactive in pursuing debt settlement arrangements consumers can prevent wage garnishments, attachments and other legal actions. By letting creditors know that you’re actively pursuing a debt settlement program you are providing some assurance they are going to be paid at least a portion of the money due them. Creditors are hesitant to initiate any legal action while a settlement program is in effect, since it only is an additional expense with no additional return.
Completely paying off your bills – When the debt reduction is done, the schedule set up to pay it off is variable, but usually is about 48 months. However, if you only made minimum payments on the previous accounts, it may take more than 25 years to get rid of it.
Debt settlement and negotiation is becoming an increasing accepted manner for consumers to address the issues of debt overload without filing for bankruptcy. Consumers still need to review all available forms of debt relief before making a decision. One of the best ways to sort through the available options is to contact an attorney with experience in consumer debt relief to decide which option is in the best interests of the consumer. Getting on the road to financial recovery is simple the matter of taking that first step.