We are bankruptcy attorneys located in Middletown, Ohio. Our main focus of practice has been Chapter 7 and Chapter 13 Bankruptcy filings for over 27 years.
Are you struggling with debt? Many Americans struggle with debt every year. Looking for the best way out of debt can be exhausting and time consuming. The most common ways out of debt are debt consolidation, debt management, debt settlement, do it yourself and bankruptcy. It is best to determine the best way out of debt for yourself. But be careful, believe it or not there are many unreliable and even predatory companies out there that will take advantage of you if you’re not careful.
In this blog we will cover these basic ways out of debt and I will show you why bankruptcy is the best way out of debt.
Debt consolidation is when you get a new loan to pay off your existing debts. The term “consolidate” means to group several things together into one, which makes sense since debt consolidation groups all of your existing debts into a new loan. Doing this may lower your monthly payment and possibly your interest rate.
The problem with debt consolidation is you have not reduced your amount of debt, you have simply lumped all of your debt into one loan with one payment. You are still accruing interest on this high balance and it will take years to pay off this single loan.
Entering into a Chapter 13 bankruptcy will also lump all of your debts into one low monthly payment. However, in Chapter 13 no interest will incur and you will only pay back a percentage of the debt you owe.
A debt management plan is a program offered by companies or non-profit groups that say they will help you negotiate a new payment plan with your current creditors. The debt management company will negotiate your debts with your creditors and you will make a monthly payment to the debt management company directly, while they will pay your creditors for you.
There are several problems with the debt management plan. First and foremost an honest debt management company is hard to find. Unfortunately not all of these companies are honest in what they are selling you and how they distribute your funds. We have had more than one client say they paid to one of these companies without ever seeing their balances go down.
Bankruptcy is held in a federal court. All bankruptcy attorneys are governed by their state bar association, which means we are legit and will not take your money and run per say.
Debt settlement is when you work directly with your creditors and they will accept a lower amount of money than what you owe them. You must have the full amount to immediately pay. This is not too bad of a way out of debt, if you have the funds to do so.
Even if you do have the funds to do debt settlement, not all of your creditors may be willing to work with you and give you a reduction in the amount you owe, so you would not get anywhere in the process with these creditors. Also, creditors who do settle with you will send you a 1099 at the end of the year and you will need to claim the amount that the creditor wrote off as income on your next tax return. You will most likely end up owing the IRS and that is just not pretty and there is not quick way out of owing debt to the IRS.
If you file for bankruptcy even in Chapter 7 where you will wipe out all of your debt and not have to pay back a dime, you will not receive any type of tax documentation. You do not have to list a bankruptcy on your tax return.
DO IT ON YOUR OWN
Aren’t you already trying to do this? Paying each month what you can afford to pay, but not really getting ahead. It really depends on the amount of debt that you have if you will ever be able to get out of debt on your own. If you don’t have much debt, then this will be a great option for you. Unfortunately, the average american household has $15,000.00 in credit card debt, not to mention medical debt. This is really no small amount to pull yourself out of.
BANKRUPTCY REALLY IS THE BEST OPTION
Bankruptcy gets a bad rap in the minds of many. Many think you have to be a deadbeat or scum of the earth to end up filing for bankruptcy protection. This is not true, there are thousands of bankruptcies filed in the U.S. each day. Most are filed by families trying to get by, just like you. Just because you file for bankruptcy does not mean that you are a bad person, just a regular person in a bad financial situation.
This is the fastest and easiest way to get out debt. True, the bankruptcy filing will stay on your credit report for up to 10 years, but all of the options above will affect you for about the same amount of time. The key to bankruptcy is afterwards paying all of your bills on time and not having debts go into collections. You will be able to get new credit rather quickly if that is what you desire. Under federal bankruptcy protection you can wipe out all of your debts and get a fresh financial start, without much penalty.
For more information check out our website at www.middletown-bankruptcy.com.
Call 513-422-2994 today for your free consultation to see if bankruptcy is your best way out of debt.