| |
Bankruptcy Alternatives Blog
|
|
.gif) |
| |
Monday, February 22, 2010
Five Reasons Why Debt Consultants Are A Bad Bankruptcy Alternative
|
|
| |
Credit and debt consultants advertise that they can settle your debts for cents on the dollar. It sounds too good to be true, and usually it is. They put you on a monthly plan where you pay hundreds of dollars per month, and they tell you they will use that money to make a debt settlement with your creditors. In many cases a debt settlement or debt management plan is a scam. It sounds good, but here are five reasons why using a debt consultant to deal with your debts is not a good idea: First, a debt consultant doesn't work for free. They will take the first few monthly payments you make for their fee. If they take the first 10 monthly payments for their fee, and then take another 10 payments for the settlement offer to the one of your credit cards, it will be 20 months before the first credit card company gets any money. It is not likely that a credit card company will do nothing for 20 months when they are not getting paid. If they are not getting paid, they will continue to call you, and they may take you to court and sue you. That's not good for you. Second, debt settlements will not work on all types of debts. The government will not accept a deal to get rid of your tax debt. They want their money, and they don't make deals, because if they make a deal with you, they will need to make a deal with everybody, and that's a bad precedent for them to set.
Third, the debt consultant has no way to force all of your creditors to accept the deal. One or two of your credit card companies may agree to a deal, but if the others don't agree and sue you, the deal will fall apart. You need relief for all of your debts, not just some of them. Fourth, in many cases the debt consultant is not doing anything that you couldn't do on your own. Putting money in a bank account for two years, and then sending it to the credit card company, does not take much skill. You can do that on your own.
Fifth, many debt consultants will meet with you, review your situation, charge you a fee, and then refer you to an American bankruptcy attorney, or a Canadian bankruptcy trustee or consumer proposal administrator! They don't actually do anything for you, other than tell you that you need professional assistance. Start with the professional; don't pay the consultant first. You have options, including a debt consolidation loan, a Chapter 13 Wage Earner Plan, and a consumer proposal. You can even file bankruptcy in Canada, or Chapter 7 Bankruptcy in the USA. Consult an expert today and review your options.
Labels: consumer proposal, debt consultant, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 10:23 AM
|
|
|
| |
|
| |
Wednesday, February 18, 2009
Bankruptcy Alternatives During an Economic Crisis
|
|
| |
The "credit crunch" of 2008 has lead to more government bailouts and a deeper recession in 2009; many experts are now even predicting a depression. What impact does this have on your bankruptcy alternatives?
Lots.
If your home equity continues to increase, and if you are getting lots of hours at work, you probably qualify for a debt consolidation loan. However, during a recession when your house is declining in value and foreclosures are on the rise, and when your income is going down, a debt consolidation loan is probably neither affordable or something you can qualify for until the economy bounces back.
If you have a good job and good income, Americans could file a Chapter 13 Wage Earner Plan, and Canadians could file a consumer proposal. Under these legal arrangements you repay a portion of your debts, and avoid having to file bankruptcy. However, to repay a portion of your debts you need an income, and if you are unemployed or working reduced hours, you may not have the income to do a Chapter 13 filing or a consumer proposal.
In other words, the recession has made it more difficult to take advantage of the bankruptcy alternatives that worked so well in the past.
What can you do? Cut your expenses, make a budget, find a part time job, sell any assets you have to raise cash, and ride out the storm. The economy will eventually improve; the trick is to keep your head above water long enough to allow you to benefit when the better times return.Labels: bankruptcy alternatives, Chapter 13 Wage Earner Plan, consumer proposal, debt consolidation
Posted by Bankruptcy Alternatives Blog
@ 3:52 PM
|
|
|
| |
|
| |
Saturday, September 27, 2008
What are my bankruptcy alternatives?
|
|
| |
As the North American economy continues to weaken, and every day we read news of bailouts, we get even more worried about our own personal financial situation. What can we do? If you are experiencing money problems and you think that personal bankruptcy is your only alternative, start with our five step program to avoid bankruptcy.
First, make a family budget. If you don't know where your money is going, you can't decide what spending to cut to free up cash to repay your debts on your own. Read our special report on budgeting for more information, and for some free tools to help you budget.
If your budget shows that you can afford it, your next step may be to try to get a debt consolidation loan. With a debt consolidation loan you consolidate your debts and make one monthly payment, at a lower interest rate than you are paying now. You need good credit to qualify.
If you don't have good credit, your next option would be to consider credit counseling through a non-profit credit counsellor about a debt management plan. They may be able to work out a plan where you repay your debts over a longer period of time, at a reduced or zero interest rate.
If that isn't affordable, a legal procedure may be necessary. In the United States you could file a Chapter 13 Wage Earner Plan. In Canada you could consider a consumer proposal. Either way, it may be possible to negotiate a legal settlement where you pay less than the full amount owing.
If even that is not affordable then, and only then, should you consider personal bankruptcy. Bankruptcy is a last resort, only to be considered if all other bankruptcy alternatives have been considered. You have options, so consider them wisely, do your research, and then make the decision that is best for you and your family.Labels: bankruptcy alternatives, Chapter 13 Wage Earner Plan, consumer proposal, credit counseling, debt consolidation, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 5:40 AM
|
|
|
| |
|
| |
Saturday, July 19, 2008
What are my bankruptcy alternatives if I own a house?
|
|
| |
In 2008 in North America the real estate market has fallen significantly. Over 1 million homes in the United States are currently under foreclosure, and the numbers are falling in Canada as well. What can you do if you own a house, but can’t afford to pay the mortgage an all of your other debts?
First, you could sell your house. If you can sell it and get enough money to repay the mortgage, that might be your best bankruptcy alternative. Sell now, before your house falls even more.
Second, you could attempt to negotiate with your mortgage lender. They do not want to foreclose on your house, so they may be willing to extend your mortgage or give you more flexible payment options. You will not know unless you ask.
Third, you could attempt to get a debt consolidation loan to deal with all of your other debts, which may give you enough free cash to stay up to date with your mortgage payments. It may even be possible to get a mortgage debt consolidation loan to reduce the interest you are paying on your mortgage.
Fourth, you could file a consumer proposal or Chapter 13 Wage Earner Plan. Again, this deals with your other debts, not your mortgage, but it may give you enough financial flexibility to keep up with your mortgage payments.
Finally, if all else fails, it may be necessary to file personal bankruptcy. Every situation is different, so you will need to research to determine if you will lose your house if you file bankruptcy; the answer will depend on the value of your house, and the amount you owe on the mortgage, and where you live.
As you can see, you have bankruptcy alternatives when you own a home. To find out more, if you live in Canada, contact a bankruptcy trustee, or if you live in the United States, contact a bankruptcy attorney.Labels: bankruptcy alternatives, consumer proposal, debt consolidation
Posted by Bankruptcy Alternatives Blog
@ 1:17 PM
|
|
|
| |
|
| |
Monday, April 07, 2008
What if I Just Stop Paying My Debts? Is Not Paying a Good Bankruptcy Alternative?
|
|
| |
At some point in almost everyone's life we get to the point where we just through up our hands and say "Enough: My debts are too high, so I'm just going to stop paying!"
For some people that may be the correct option, but it does have one significant danger: If you stop paying, it is possible that your creditors will take you to court, sue you, and attempt to garnishee your wages. If you own property, like a car or a house, they could attempt to put a lien on your property, seize it, and sell it to repay your debt.
If you currently own no property or have no wages, you are "creditor proof", so doing nothing may be an option. If you get a pension or welfare, it is unlikely that those payments can be garnisheed, so there may be little risk of a garnishment. You could open a new bank account at a new bank that is not known to your creditors, and continue on until your situation changes.
However, if you do have a job, doing nothing is probably not the correct option for you. You need to take action. Try contacting your creditors and working out a repayment plan. If you need help, a credit counselor can meet with to determine if a debt management plan is the correct solution for you. If you still have good credit, a debt consolidation loan is another possible option.
If you live in the United States, a Chapter 13 Wage Earner Plan is a good personal bankruptcy alternative. In Canada, a consumer proposal is an excellent solution in many cases.
The point to remember is that doing nothing may be an option, but there are many other bankruptcy alternatives, so research your options and decide on the option that's best for you.Labels: bankruptcy alternatives, Chapter 13 Wage Earner Plan, consumer proposal, credit counseling, debt consolidation, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 7:37 AM
|
|
|
| |
|
| |
Monday, January 28, 2008
Debt Management Plans and Consumer Proposals: Which is the Better Bankruptcy Alternative?
|
|
| |
Note: a consumer proposal can only be filed in Canada. Americans can consider a similar procedure called a Chapter 13 Wage Earner Plan.
At first glance a debt management plan and a consumer proposal appear to be very similar. In both cases you make payments each month that are distributed to your creditors, so they are both a good bankruptcy alternative. There are, however, some significant differences.
A debt management plan is administered by a credit counsellor, while a consumer proposal is administered by a bankruptcy trustee. A bankruptcy trustee is an officer of the court, and therefore has the power to force creditors to accept the proposal. Here is how it works:
In a consumer proposal, each creditor gets one vote for every dollar they owe. If more than half of the dollar value of creditors votes yes, all creditors must accept the proposal. In a debt management plan, even if eight out of nine creditors vote yes, there is no way to force the final creditor to accept the plan. For that reason in most cases a consumer proposal is the preferred bankruptcy alternative.
In addition, in a debt management plan the creditors generally must be paid in full. In a consumer proposal it is often possible to get the creditors to agree to accept 50 cents on the dollar, or even less.
To file a consumer proposal you must be insolvent (owing more than you own, and being unable to pay your debts). Insolvency is not a requirement for a debt management plan, so that may be a reason to select the debt management plan option.
Which bankruptcy alternative is right for you? Contact a proposal administrator or a credit counsellor for more information.Labels: Chapter 13 Wage Earner Plan, consumer proposal, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 10:24 AM
|
|
|
| |
|
| |
Saturday, October 27, 2007
Wage Earner Plan: How Can a Chapter 13 Wage Earner Plan Help Me?
|
|
| |
Chapter 13 of the federal bankruptcy laws gives individuals the right to propose a plan to their creditors to repay their debts. Chapter 13 is also known as a Wage Earner Plan, because it is usually filed by people who earn wages, and they use some of their wages each month to repay the creditors. (Under current law the owner of an unincorporated business can also file a Chapter 13 Wage Earner Plan). Chapter 13 is a great alternative to bankruptcy.
Wage Earner Plans are only available to residents of the United States. Residents of Canada should consider a consumer proposal, which is a very similar procedure.
To qualify under Chapter 13, an individual must have unsecured debts (those not backed by collateral to guarantee their repayment) of less than $100,000 and secured debts (debts backed by collateral, such as a house mortgage) of less than $350,000. A debtor files a Chapter 13 petition listing all debts. Upon the filing, the debtor's creditors must stop their collection activity while the creditors vote on the plan.
A typical Chapter Thirteen petition would include a repayment plan that lasts up to five years, and is funded by both the debtor’s wages, and by the sale of property of the debtor if applicable. The plan is supervised by a bankruptcy trustee, and must treat all creditors fairly, meaning each unsecured creditor will receive the same number of cents on the dollar.
The repayment plan may require the debtor to pay off only a portion of each debt, or the debtor may receive extra time to repay their debts, or they may receive both lesser payments and an extension of time.
It is these reduced payments that are the big advantage of a Chapter 13 Wage Earner Plan. If you can’t afford to make the full minimum payments of say $1,000 per month on your debts, but you could afford to pay $500 per month, a Chapter 13 Wage Earner Plan may be a great solution.
Even better, the Chapter 13 plan can be approved only by the court; the creditors can object, but the final decision is left to the court. After you have completed all of the payments, you are discharged from all of your debts, except for debts relating to alimony and child support, federal student loans, and taxes.
If you need a break, a research how a Chapter 13 Wage Earner Plan may be the correct bankruptcy alternative for you and your family.Labels: Chapter 13 Wage Earner Plan, consumer proposal
Posted by Bankruptcy Alternatives Blog
@ 6:14 AM
|
|
|
| |
|
| |
Monday, July 02, 2007
Chapter 13 Wage Earner Plans, Financial Counseling, and Consumer Proposals – Which is a better bankruptcy alternative as far as my credit report is co
|
|
| |
It is a common misconception that financial counseling, or consumer credit counseling, is much better than a Chapter 13 Wage Earner Plan (in the United States) or a consumer proposal (in Canada) as far as your credit score is concerned.
In fact, they are all about the same. Each of these options will have a negative impact on your credit report.
To prove this point, we went to the web site for Equifax, the largest credit reporting agency in the world. Equifax explains that information in the Public Records section of your credit report remains on your credit report for 7 years.
What is a public record? Here is the definition of a public record from Equifax:
The 'Public Records' section reports the presence of several types of items on your credit report, including accounts that have been turned over to a collection agency, matters of public record, bankruptcies, and similar items. …The different types of items that may appear in the 'Public Records' section of your Equifax Credit Report™ are:
Bankruptcy A legal agreement in which a consumer is declared fully or partially unable to repay debts. In return for full or partial release from those debts, the consumer may sacrifice some property or agree to a payment plan. There are two different types of bankruptcy for consumers: Chapter 7 and Chapter 13.
Financial Counseling
A voluntary method of debt restructuring in which a person makes a lump sum payment to a financial counseling agency who distributes the funds to creditors. Consumers in financial counseling may have an arrangement to pay all or part of their consolidated debt.
Equifax goes on to state that:
Chapters 7, 11, and non-discharged or dismissed chapters 12 and 13 remain on file for 10 years from the date filed
Accounts paid as agreed remain on file for up to 10 years from the date of last activity (DLA)
In other words, whether you do consumer credit counseling or a Chapter 13 Wage Earner Plan the note on your credit report stating that you have filed the procedure is likely to remain on your credit report for up to 10 years. So which option should you choose?
Since your credit report is likely to be the same in either case, you should use other factors to decide on the correct option for you. In most cases a Chapter 13 Wage Earner Plan results in you paying less than the full amount of your debts owing, and so that may be the preferable option. However, professional advice is recommended, so consult a bankruptcy attorney or credit counselor to help you decide which bankruptcy alternative is right for you. Labels: Chapter 13 Wage Earner Plan, Chapter 7 bankruptcy, consumer proposal, credit counseling
Posted by Bankruptcy Alternatives Blog
@ 6:54 AM
|
|
|
| |
|
|
|
|
|
|
|
