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      January 21, 2018

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Related Articles

Benefits of Debt Settlement

Debt Consolidation vs Debt Settlement

Debt Relief vs Bankruptcy

Pitfalls of Declaring Bankruptcy

Reasons for Debt Consolidation

The Bankruptcy Process Explained

What Is Debt Consolidation?

What Is Debt Negotiation?

What Is Debt Settlement?

What To Do if You're In Debt

 

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Pitfalls of Declaring Bankruptcy

When all other options have failed, those who are mired with extensive financial debts may find themselves facing the option of declaring bankruptcy.

There are two kinds of bankruptcy for which Americans are able to file: Chapter 13 and Chapter 7.

Chapter 13 bankruptcy, also known as “reorganization bankruptcy,” is designed to allow consumers to repay creditors in full or in part. Consumers are given a three to five year window to repay their debts according to the terms of the bankruptcy agreement. Chapter 13 bankruptcy allows the debtor to keep their assets because they have agreed to work out a repayment schedule for creditors.

Qualifying for Chapter 13 bankruptcy involves an individual’s ability to prove they earn enough money to be able to repay their creditors during the length of the repayment process. If a debtor is unable to prove financial ability to repay, they will not be permitted to file under Chapter 13.

The other kind of bankruptcy is known as Chapter 7, which involves all or some of a person’s property being sold in order to settle their debts. Some property, such as clothing, vehicles and furniture, is considered exempt and cannot be liquidated during Chapter 7 bankruptcy.

There are some pitfalls to filing for bankruptcy that should be considered prior to making the move.

The most serious pitfall is that it will negatively affect one’s credit report for 7 to 10 years. It can lower one’s credit score, which will make it incredibly difficult to secure new lines of credit, including credit cards and loans.

Filing for bankruptcy also can affect a person’s ability to secure future employment. In today’s employment environment, prospective employers have made it routine practice to conduct full background checks on candidates for hire – which includes a copy of one’s credit report. Over 80 percent of employers who were polled in 2012 said they use background checks and financial reports as a factor in the hiring process.

Those who have spotty financial histories are less likely to be hired than their more financially-secure counterparts.

Another hidden disadvantage to filing for bankruptcy is that the state and federal governments may not be required to provide tax refunds annually. Any money that may have been refunded could be garnished in order to pay creditors.

Those who have successfully filed for bankruptcy also can expect to pay higher interest rates for credit cards and other loans – if they are even able to secure them. Like consumers who have bad credit and low credit scores, those who have filed for bankruptcy can expect to be subjected to outrageously high interest rates for the duration of their bankruptcy and sometimes even a few years beyond it.

Another serious disadvantage to bankruptcy is that it may not clear all debt that is owed. Even in the case of Chapter 7 bankruptcy – when a debtor’s assets have been liquidated in order to pay creditors – some debt will remain exempt from the bankruptcy process. The holders of that debt may come back on the consumer for repayment of the full amount owed.

While there are both advantages and disadvantages to filing for bankruptcy, consumers must evaluate their individual circumstances and then determine which outweighs the other before making the decision to file. Thankfully, there are other options, such as debt consolidation and debt settlement, which can help a consumer much better than declaring bankruptcy. A knowledgeable debt relief company can guide consumers through which option is best for them.

COMMENTARY: Property tax relief and a debt plan for Texans

Here in McAllen, and across the state of Texas, homeowners and businesses are being crushed by property taxes. Over the past 20 years, property tax collections in Texas have increased by 195 percent. Rising property taxes are undermining private property ...

Published:  Sun, 21 Jan 2018 11:09:00 GMT



Euro Working Group Head Blames Politicians for Greek Crisis, Supports Debt Relief

In an interview with the Athens News Agency, Austrian economist and outgoing chief of the Eurogroup Working Group (EWG) Thomas Wieser blames Greek politicians for the 2008 financial crisis in the country and says he supports Greek debt relief. Asked ...

Published:  Sat, 20 Jan 2018 10:02:00 GMT



Outgoing EWG president Th. Wieser: Debt relief for Greece "highly advisable and highly probable"

Thomas Wieser, the outgoing chief of the Eurogroup Working Group (EWG), is an Austrian economist with extensive experience in macroeconomic policy and EU financial affairs. He ostensibly is one of the few Europeans who have known from the start and "from ...

Published:  Sat, 20 Jan 2018 04:22:00 GMT



Top 10 Jungle Explains Debt Relief: Your 5 Choices in the Financial Jungle

"Debt is an issue that can spiral out of control in a short period of time. The only real way to tackle rising debt is to take action," said Charlie Rose of Top10Jungle.com, "Although it can be incredibly difficult to face up to the fact that you're in ...

Published:  Tue, 16 Jan 2018 14:51:00 GMT



Best Personal Loans for Debt Consolidation

When random purchases, necessary expenses or extravagant splurges catch up with you, the best way to consolidate credit card debt can be through debt consolidation. Debt consolidation is a way to refinance existing debt by taking out a new loan, which can ...

Published:  Wed, 10 Jan 2018 13:00:00 GMT



'I cleared £180,000 of debt in 12 years - such a relief'

A MoneySaver who racked up £180,000 in debt on loans and credit cards has told how she finally became debt-free 12 years later, thanks to the debt charity Stepchange and help from the MoneySavingExpert.com Forum. Forumite 'Lozzam' says that to this day ...

Published:  Fri, 19 Jan 2018 00:00:00 GMT



Here's How A Student Loan Debt Relief Company Preyed On Its Customers

In the shadowy world of the student loan debt industry, even the companies that call themselves the good guys sometimes deal in the darkness. The Student Loan Assistance Center has positioned itself as a model actor in the country's troubled tangle of ...

Published:  Fri, 12 Jan 2018 21:06:00 GMT



Money Issues In A Relationship And How To Deal With It Shared By National Debt Relief

Money issues in a relationship is a common situation and National Debt Relief shares some tips on how couples can deal with them. The article titled "I Have Debt: Dealing With Money Issues In A Relationship" released January 8, 2018, helps couples ...

Published:  Thu, 18 Jan 2018 23:02:00 GMT



Deposit farmers' debt relief, Andhra Pradesh CM Chandrababu Naidu tells officials

VIJAYAWADA: Chief Minister N Chandrababu Naidu directed officials to deposit the third installment of the debt redemption scheme amount in the bank accounts of the beneficiary farmers within three days. He said that the government was yet to distribute Rs ...

Published:  Tue, 09 Jan 2018 19:17:00 GMT



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