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What Alternatives Are There to Filing Bankruptcy?

March 06, 2012 | Comments: 0 | Views: 127

Recently, the Dow closed above 13,000 for the first time since 2008 and the media went wild declaring an economic recovery. The mainstream media has been putting a lot of effort into stating that the White House's economic policies are working great. In reality, it's getting much worse and many Americans will be facing the problem of filing bankruptcy. Currently, the United States Government debt per capita is higher than Greece, Portugal, Italy, Ireland and Spain. What's sad is all of these countries are on the verge of default and filing bankruptcy. The US has an unusual benefit that no other country in the world has, the ability to print more money. The government has continued to print money to dig itself out of debt with QE1 and then QE2 and many are talking about QE3 being on the way. This all works fine and good, until the other countries stop accepting our money for debt payment. Printing all this money has a dramatic effect on the way Americans live. Just look at the Weimar Republic and the hyperinflation that took the entire country down from doing the exact same thing. The only thing scary is this is on a much greater scale.

It's time that Americans get their own house in order and do whatever it takes to get out of debt. When people think of debt elimination, the first thought that comes to mind is filing Chapter 7 bankruptcy. There is also a lesser-known chapter of personal bankruptcy that's available and that is Chapter 13. The good thing about Chapter 7 bankruptcy is it wipes out all unsecured debts. The list includes credit cards, medical bills, personal loans and payday loans. But to use either of these chapters of personal bankruptcy, one should speak to a bankruptcy lawyer first. Both chapters of personal bankruptcy have their benefits for different circumstances and only a bankruptcy lawyer would be able to make that decision. A lot also rides on the amount of money the individual filing bankruptcy makes. Now, when filing Chapter 7 bankruptcy a debtor is limited to making the median household income for their state. For those that make too much money, they will need to file Chapter 13 bankruptcy. A Chapter 13 bankruptcy has many benefits, but where it really shines is protecting real estate. A Chapter 13 shares the power of the automatic stay, stopping collection activity, foreclosure, lawsuits and wage garnishments. This puts the power in the hands of the debtor to have their bankruptcy lawyer negotiate a repayment plan that will last 3 to 5 years.

For individuals that don't qualify to file Chapter 7 bankruptcy, but don't really want to file a Chapter 13, there is debt settlement. Typically, a bankruptcy lawyer will advise a client to use debt settlement if the individual has debt of under $10,000. The problem with the debt settlement is, the individual will have to pony up the cash to pay the creditor in full to negotiate a settlement. Usually, most creditors will negotiate a 50% debt settlement, so if the individual has $6000 in debt, the creditor will accept $3000 to pay account in full. The debtor needs to make sure they negotiate how the debt settlement will be reported on their credit and also make sure that the creditor is not going to create a taxable event and 1099 the debtor.

No matter which way you look at it, unless you have a small amount of debt personal bankruptcy is king. Filing bankruptcy, with the help of a bankruptcy lawyer, allows the debtor to truly get a fresh start on their financial future.

The author is a professional that formed FilingBankruptcyPros.Com which provides information for debtors considering filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy and helps individuals stop foreclosure and eliminate their debt by putting them in touch with a local bankruptcy lawyer.

Source: EzineArticles
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