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Different Ways Of Dealing With Debt.
By: Www.creditandyou.com
Bills, creditors, debt collectors. Are you yearning for the days when all you
had to worry about was the money in your piggy bank? If so, you are far from
alone. Whether its illness, loss of a job, or simple overspending, it happens to
the best of us. But that doesn’t mean your financial situation needs to go from
bad to worse.
Steps You Can Take To Regain Control When Finances Get Out Of Hand...
Developing A Budget: Start by doing a realistic assessment of how much money
comes in and how much your spend. List income sources, “fixed” expenses
(mortgage or rent, car, insurance) and expenses that vary (entertainment,
clothing, recreation). Don’t leave anything out, no matter how trivial it seems.
Obviously, the necessities are your first priority. Then you can prioritize the
rest. The bottom line Is, that unless there’s money to cover, you’re going to
have to cut back on spending.
Contacting Your Creditors: Many creditors will work with you if you let them
know you are having trouble making ends meet. Tell them why it’s difficult for
you and try to work out a modified payment plan that reduces your payments to a
more manageable level. Don’t let them give up on you – get to them before they
resort to collection agency action.
Dealing With Debt Collectors: Nobody wants to deal with the bill collector –
least of all you! But, should it happen, be sure you know the rules. The Fair
Debt Collection Practices Act is the law that dictates how and when a debt
collector may contact you ...
A debt collector may not call you before 8a.m. or after 9p.m ... or at work if
the collector knows that your employer doesn’t approve of the calls. Collectors
may not harass you, make false statements, or use unfair practices when they try
to collect a debt.
Debt collectors must honor a written request from you to stop further contact.
Bankruptcy: Personal bankruptcy is generally considered the debt management tool
of last resort because the results are long-lasting and far-reaching. A
bankruptcy stays on your credit report for 10 years, making it difficult to
acquire credit, buy a home, get life insurance or sometimes even get a job.
Learn more about bankruptcy
On the other hand, bankruptcy is a legal procedure that offers a fresh start for
people who can’t satisfy their debts. Individuals who follow the bankruptcy
rules receive a discharge or court order that says they do not have to repay
certain debts. There are two primary types of personal bankruptcy:
Chapter 13 bankruptcy allows you, if you have a regular income and unlimited
debt, to keep property, such as a mortgaged house or car, that you otherwise
might lose. In chapter 13, the court approves a repayment plan that allows you
to pay off a default during a period of three to five years, rather than
surrender any property.
Chapter 7 bankruptcy known as straight bankruptcy, involves liquidating all
assets that are not exempt. Exempt property may include cars, work-related tools
and basic household furnishings. Some property may be sold by a court-appointed
official (trustee) or turned over to creditors.
NOTE: You can receive a discharge of your debts under Chapter 7 bankruptcy only
once every six years.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures,
repossessions, garnishments utility shut-offs and debt collection activities.
Both also provide exemptions that allow you to keep certain assets, although
exemption amounts vary.
Personal bankruptcy usually does not erase child support, alimony, fines, taxes
and some student obligations. Also, unless you have an acceptable plan to catch
up on your debt under Chapter 13, bankruptcy does not allow you to keep property
when your creditor has an unpaid mortgage or lien on it.
Being burdened by debt is overwhelming and puts you into a position of great
vulnerability. And, clearly, yielding to bankruptcy is an extreme measure that
requires a great deal of thought. In the last few years, a record number of
consumers have been filing for bankruptcy.
About the Author:
To find out more about bankruptcy, how the most common chapters of bankruptcy
work, bankruptcy terminology, and easy steps anyone can take to repair there
credit report, visit: http://www.creditandyou.com/dealingwithdebt.html it’s a
free information website!
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