Options for Getting out of DEBT

Posted By David Pritchard || 08/24/2020

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.

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 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 or all of our income.

CREDIT COUNSELING

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

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 the debt settlement companies still take their fees.

BANKRUPTCY

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.

To learn more about your options please contact The Pritchard Law Firm at (817) 285-8017 to set a free appointment to learn which option is best in your circumstance.  Do not spend another sleepless night worrying about what you are going to do, contact The Pritchard Law Firm today and sleep better tonight.

David Pritchard
The Pritchard Law Firm
david@dlplegal.com

Categories: Bankruptcy , Budgeting Tips , Debt

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