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Are bills taking too big a bite out of your paycheck? Are you tired of sinking further and further into debt? Are you scared because the creditors are calling day and night and you don’t know what’s going to happen to you? To your credit score? To the stuff you own? Well, you shouldn’t be and this report talks about why.
Owing on balances you can’t afford is bad enough, so the last thing you need is a debt collector hounding you about it. Or filing a lawsuit that could result in garnishing your hard-earned pay. And don’t think for one minute that they’ll cut you any slack. These folks are in it to win it, and they want to make as much money as they can.
Whether you have fallen behind because of a layoff, health issues, divorce or even reduced income due to retirement, it doesn’t matter because the creditors will be coming after you to collect their money.
If you have a home mortgage and you miss mortgage payments, your interest in your home is protected by law, so the creditor has to go through a legal process called "foreclosure" in order to take your home from you and your family.
If you have a car and you miss payments, many states have what is called "self-help repossession."
So, if you miss a car payment, the car creditor (which is who you owe your car payment to) doesn't have to do anything legally to take your car. He or she can simply send someone out to tow it away.
Then, you have things such as credit card bills, medical bills and other debts you owe with no property that would be lost if those debts aren't paid. These creditors will go after your paycheck by sending your employer a wage garnishment.
A wage garnishment is where a certain amount of your wages every week can be taken away, by legal force (court order), in order to collect your debt.
Now, the best way to avoid all of these is to catch them before they happen. In other words, you know you're behind on your bills because for one reason or another, you have debts you simply cannot pay and you know that in advance of any collection efforts.
So, the trick is to take action while you still can - while the decision-making power is in your hands and not with a debt collector.
There are steps you can take to protect yourself in advance of creditors taking your property. Let's talk about those, but get ready to learn the secrets your creditors don’t want you to know!
You see, your creditors don’t want you to know that you have options for getting out of debt. In fact, our credit system is designed to keep hard working consumers like you trapped in debt they will almost never get out of. Well, it doesn’t have to be that way and here is why. . .
When you find yourself in the awful position of not being able to pay your bills, there are several things you could choose to do, but some of them simply do not help as much as you would like them to.
OLD FASHIONED BUDGETING
If you have some income left over after you've paid all your basic monthly expenses, you might be able to dig yourself out of debt trouble. The path can be slow and arduous but, with hard work and diligence, you can be successful. Be sure to prioritize your debts and expenses, listing those that are essential to pay—like the mortgage, utility bills, and child support—and those that might be less important, like department store charge cards or loans from family and friends. Budgeting is not usually an option if we have lost a large part of or all of our income.
If what you really need is money management education or budget counseling, consider getting help from a credit counseling organization. These agencies can also suggest options for digging out of debt, provide housing counseling, and refer you to other agencies that provide specialized help. Some credit counseling agencies can contact your creditors to set up payment plans, or create a debt management plan. If you do want help from a credit counseling agency, check out the company's credentials first. Not all agencies are legitimate—some charge excessive fees, fail to perform promised services, or provide bad advice. Also, many credit counseling debt management plans will negotiate a lower required monthly payment for you with your creditors, but if the creditor does not agree to waive the interest, you can actually owe more to that creditor than when you started. Credit counseling debt repayment plans also will not include any loans on your house or car, so if you are behind in those payments, you will still have to work something out with that creditor.
Debt settlement companies are for-profit companies that claim that they can eliminate consumers’ debts by negotiating settlements with creditors that are a mere fraction of the consumer’s outstanding debt. Many of these companies accomplish little for consumers and charge hefty fees.
Many debt settlement companies make promises that they simply cannot keep and leave consumers in worse financial state then when they began. These companies advise consumers to stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.
However, most consumers who sign-up with the debt settlement companies find the companies’ promises are empty. Creditors are under no obligation to settle for less money and often refuse to do so. Consumers who follow the debt settlement companies’ advice to ignore collection efforts or refer those efforts to the debt settlement company usually continue to find themselves subject to creditors’ collection efforts, including lawsuits. And the debt settlement companies’ saving plans are often extremely unrealistic, so that the promised negotiated settlements do not occur, but the debt settlement companies’ still take their fees. In addition, consumers’ credit histories are further damaged when the consumers stop paying debts.
A credit repair company is an organization that offers to improve your credit in exchange for a fee. The companies often promise to handle all the heavy lifting of working with the credit reporting agencies.
Credit repair organizations are different from credit counseling agencies, which are typically a free resource from nonprofit financial education organizations that review your finances, debt and credit reports with the goal of teaching you to improve and manage your financial situation.
According to the Federal Trade Commission, the credit repair industry is fraught with scams. To help avoid scammers, it’s important to research any credit repair organization before agreeing to work with it.
Many of these companies will simply provide you a form letter to send in to the big 3 credit reporting agencies and dispute every debt listed on your report and wait to see if anyone replies. Under the rules, if the creditor does not reply within a certain amount of time, then the debt must be taken off of your credit report. This process is supposed to be reserved for disputing debts that are not reported properly, but many credit repair companies will have you dispute all of them knowing some will not respond and, therefore, your credit score will improve.
Bankruptcy is an affordable and surprisingly easy federal court remedy that frequently allows debtors to get rid of their debt and start over without paying anything back. Bankruptcies can generally be described as "liquidation" (Chapter 7) or "reorganization" (Chapter 13).
The biggest advantage to filing a bankruptcy is that you are in control and are forcing your creditors to accept what you propose in your case, whereas all of these other options the power is still with the creditor to say NO. And eliminating the debt altogether is the best way to make sure you get a fresh start.
But what about all of the things you hear about filing bankruptcy? Isn’t bankruptcy going to cause all kinds of bad things to happen to me, my stuff and my credit? Well, actually that is not true! Bankruptcy is the one thing your creditors don’t want you to learn the truth about. In fact, there are many myths about filing bankruptcy that are spread by your creditors to keep you from choosing that option.
This report is to give you the truth. The truth about the top secrets your creditors don’t want you to know. So, let’s get to it. I am going to show you the top 16 myths about filing bankruptcy AND the actual FACTS. Right here, right now!
Bankruptcy Myth 1: Bankruptcy Doesn't Really Get Rid Of Debt. Sooner Or Later, You Still Have To Pay It All Back. Right?
FACT: Bankruptcy lets you get rid of certain debts without paying for them...without EVER having to pay for them. When bankruptcy gets rid of debts...those debts are gone...FOREVER. Getting rid of certain debts without you having to pay them back is simply how bankruptcy works.
Bankruptcy Myth 2: Everyone Will Know You Have Filed For Bankruptcy.
FACT: Unless you're famous, chances are very good that the only people who will know about a filing are your creditors and the people you tell. While it's true that your bankruptcy is a matter of public record, unless someone is specifically trying to track down information on you, there is almost no chance that anyone will even know you filed.
Bankruptcy Myth 3: You Will Lose Everything You Have.
FACT: Most chapter 7 filers don't lose anything. In every bankruptcy case, there are certain laws that allow you to keep the property you own. Very rarely does anyone lose property if their bankruptcy is prepared correctly.
Bankruptcy Myth 4: You Will Never Be Able To Own Anything Again.
FACT: This is completely false. There are no laws prohibiting you from buying homes, cars, trucks, equipment, household goods, etc. Once you get what is called your ‘discharge in bankruptcy’, many people, within 2 years after their bankruptcy case closes, have new cars, have bought houses, and have excellent credit.
Bankruptcy Myth 5: You Will Never Get Credit Again.
FACT: FILING BANKRUPTCY MAY BE THE BEST THING THAT EVER HAPPENS TO YOUR CREDIT. Filing bankruptcy gets rid of debts you can't afford. Besides, having less debt to pay after a bankruptcy makes you look more attractive to banks, credit card companies and other lenders. In my experience, unfortunately, it won't be long before you're getting credit card offers again.
Bankruptcy Myth 6: Filing Bankruptcy Means You're a Bad Person.
FACT: Filing bankruptcy means you’re a good person, acting responsibly. Everyone wants to pay their bills. Everyone. And everyone wants to take care of their family and provide their family with all the things they need. Putting our family first and making the changes necessary to make sure we have a roof over our head, food on the table and warm clothes to wear is the most responsible thing we can do.
You need to get over blaming yourself. Most of the people who file bankruptcy are good, honest, hard- working people, just like you and me, who file as a last resort after months or years of struggling to pay the bills. You’re completely wrong in thinking that you’re a deadbeat if you file bankruptcy. Filing bankruptcy is actually one of the most positive, responsible, honorable and noble steps you can take on behalf of your family and your family’s future, happiness and prosperity.
Bankruptcy Myth 7: Filing Bankruptcy Will Hurt Your Credit For 10 Years.
FACT: You are getting 2 completely different concepts confused with each other. You are getting the fact that bankruptcy is reported on your credit report for up to 10 years mixed up with the effect that reporting will have on your credit. Just because something is reported on your credit report does NOT mean it will have a negative effect on your credit standing. Usually, on the date you file bankruptcy, that is the worst your credit report will ever look and most people will have successfully rebuilt their credit within 2 years.
Bankruptcy Myth 8: If You're Married... Both You and Your Spouse Have To File For Bankruptcy.
FACT: Cases are filed every day where a husband, or a wife, but not both, file bankruptcy. In many cases, where husband and wife both have a lot of debt, it makes sense and saves money for them to both file, but it is never a ‘requirement’ under the law. However, in many situations, there is no good reason at all for the second spouse to file. In these situations, the spouse who needs the help can file and leave the other spouse completely out of it.
Bankruptcy Myth 9: It's Really Hard To File For Bankruptcy.
FACT: Not when you file with an EXPERIENCED bankruptcy attorney.
Bankruptcy Myth 10: Even If You File For Bankruptcy, Creditors Will Still Harass You and Your Family.
FACT: The minute you file bankruptcy, the Bankruptcy Court issues a Federal Court order telling all of your creditors to leave you alone, or else they will be fined. There is nothing more powerful against your creditors than the possibility of a federal judge coming down on them for trying to contact you after the case is filed.
Bankruptcy Myth 11: If You File For Bankruptcy, It May Cause More Family Troubles and May Even Lead To Divorce.
FACT: Filing bankruptcy is not the problem. The problem is not being able to pay your bills and not being able to provide for your family. This is what causes stress and anxiety in the marriage. Too many bills to pay? Want to avoid divorce? File bankruptcy.
Bankruptcy Myth 12: You Can't Get Rid of Back Taxes Through Bankruptcy.
FACT: A bankruptcy can eliminate many back taxes. Under the law, there are 4 or 5 qualifications that have to be met, but if these are met in your bankruptcy your taxes are gone.
Bankruptcy Myth 13: You Can Only File Once For Bankruptcy Protection.
FACT: You can file and get a discharge under Chapter 7 once every 8 years. And if you need protection from your creditors before that, there are other types of bankruptcy you can file.
Bankruptcy Myth 14: You Can Pick and Choose Which Debts and Property To List In Your Bankruptcy.
FACT: No. Doing so would be against the law. Under the law when you file bankruptcy, you have to list all your property and all your debts. Don’t believe a creditor or bill collector if they tell you that you have the choice to leave them out of the bankruptcy.
Bankruptcy Myth 15: You Can't Afford To File Bankruptcy.
FACT: In most cases, you can’t afford not to! Most people think they can't afford to file bankruptcy because they can't afford their bills. When a person or couple decides to file bankruptcy, the money used to make payments on their bills is used to pay a bankruptcy attorney.
Written by James Brown, Esquire