It is difficult to choose between two or more debt relief programs. You must evaluate the pros and cons and determine which outcomes you can accept. You must also consider how much you can afford to pay and how much you are prepared to sacrifice in order to eliminate your debts. Each possesses its own advantages and disadvantages. It is imperative that you select the correct option, because if you do not, you may end up paying more for the same amount of debt.
First and foremost, obtain a copy of your credit report. This will provide insight into your current debt issues. This number will determine which debt relief option you should pursue.
When you have more debt than income, choosing bankruptcy over debt resolution is one of the first indications you should do so. Obviously, you must first exhaust your efforts to reduce your expenses or increase your income. But if none of your efforts to increase your debt payment fund succeed, you may be forced to declare bankruptcy.
Additionally, you must determine which Chapter you are eligible for. Chapter 13 bankruptcy may be required for those with a median income or higher in the state where the petition was lodged. This sort will require the applicant to adhere to a low-interest repayment plan that will be monitored by the courts. If this is the case, you may want to reconsider debt settlement so you can compare the costs of going through it to the effects of bankruptcy on your credit score. If you qualify for Chapter 7 bankruptcy, however, that is the best option. Through this chapter, all of your debts will be wiped out - at least those of the appropriate variety. Unlike Chapter 13, no repayment plan exists.
It is essential that you calculate the costs associated with filing for bankruptcy or enrolling in a debt settlement program. If the costs are comparable to the latter, it may be your best option. But if the total amount you will pay off is significantly less (even with a Chapter 13 filing), then you know that filing for bankruptcy is the best option.
A history of bankruptcy will have a significant impact on your future purchasing power due to the drastic reduction in your credit score. With a debt settlement, your credit score may drop significantly, but there is a possibility it will only drop by 50 points. In the event of bankruptcy, the minimum decrease is 200 points. It is a very steep ascent from there.
Keep in mind that some debts cannot be eliminated even through bankruptcy. Before committing to a specific form of debt relief, consider all relevant factors.
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