Many turning to bankruptcy for fresh start
"Filing for bankruptcy protection, of course, isn't a debtor's only solution, or for that matter, the first step to take when bills get overwhelming. A bankruptcy will be posted on your credit report for years, and you'll end up paying higher interests rates when credit is extended to you. Prospective employers, too, sometimes review job candidates' credit reports and may frown on a bankruptcy.
Here are some steps to avoid filing, and what you can expect if you do file:
'The first thing you should do is stop charging, so you don't go any further in debt,' said John Ventura, a bankruptcy lawyer in Brownsville, Texas, and author of 'The Bankruptcy Kit.'
Next, take an assessment of income, living expenses and debt, and how much money you realistically can put toward bills each month. Sometimes getting a second job for a period can provide the extra cash to pay down bills faster, Ventura said.
Contact creditors if financial difficulties will cause you to get behind in payments. They don't want you filing for bankruptcy and often are willing to work out a repayment plan with you, experts said.
If you need help with budgeting or dealing with creditors, consider visiting a nonprofit consumer credit counseling agency, Ventura said.
Choose a credit counselor with care. Hundreds have sprung up in the past decade, particularly over the Internet, and sometimes charge hefty fees. Good agencies usually will charge no more than a small fee, spend time with you assessing your finances and emphasize budgeting and education, experts said.
Check consumer complaints about an agency through the Better Business Bureau or the state consumer protection office.
Typically, credit counseling agencies find that one-third of clients can resolve their financial problems with budgeting guidance, said Linus Campbell, director of education for the Consumer Credit Counseling Service of Maryland and Delaware. Another one-third usually end up in a debt management plan, where the counseling agency works with creditors to set up a repayment schedule, he said.
The rest have such serious problems that bankruptcy may be the solution, Campbell said.
How do you know if you're in this last category?
'If you reach a point where creditors threaten to take something away from you, threaten you with foreclosure on your home or repossession or garnishment of your wages,' Ventura said.
Once you file for bankruptcy, the court stops creditors from taking action against you, Ventura said.
Not all debt can be erased through bankruptcy. For instance, you can't get rid of alimony, child support and most taxes. There's also a high hurdle to overcome to wipe out federal student loans, so these usually must be repaid."
Full Article from the Centre Daily Times
Here are some steps to avoid filing, and what you can expect if you do file:
'The first thing you should do is stop charging, so you don't go any further in debt,' said John Ventura, a bankruptcy lawyer in Brownsville, Texas, and author of 'The Bankruptcy Kit.'
Next, take an assessment of income, living expenses and debt, and how much money you realistically can put toward bills each month. Sometimes getting a second job for a period can provide the extra cash to pay down bills faster, Ventura said.
Contact creditors if financial difficulties will cause you to get behind in payments. They don't want you filing for bankruptcy and often are willing to work out a repayment plan with you, experts said.
If you need help with budgeting or dealing with creditors, consider visiting a nonprofit consumer credit counseling agency, Ventura said.
Choose a credit counselor with care. Hundreds have sprung up in the past decade, particularly over the Internet, and sometimes charge hefty fees. Good agencies usually will charge no more than a small fee, spend time with you assessing your finances and emphasize budgeting and education, experts said.
Check consumer complaints about an agency through the Better Business Bureau or the state consumer protection office.
Typically, credit counseling agencies find that one-third of clients can resolve their financial problems with budgeting guidance, said Linus Campbell, director of education for the Consumer Credit Counseling Service of Maryland and Delaware. Another one-third usually end up in a debt management plan, where the counseling agency works with creditors to set up a repayment schedule, he said.
The rest have such serious problems that bankruptcy may be the solution, Campbell said.
How do you know if you're in this last category?
'If you reach a point where creditors threaten to take something away from you, threaten you with foreclosure on your home or repossession or garnishment of your wages,' Ventura said.
Once you file for bankruptcy, the court stops creditors from taking action against you, Ventura said.
Not all debt can be erased through bankruptcy. For instance, you can't get rid of alimony, child support and most taxes. There's also a high hurdle to overcome to wipe out federal student loans, so these usually must be repaid."
Full Article from the Centre Daily Times
posted by Dave at 6:48 AM
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