What are problem debts and how to handle them in bankruptcy?


What are Problem Debts?
Your debts far exceed your income. You are behind on your payments including your mortgage payments and other bills, and your creditors are constantly harassing you. You become sick few months ago, and could not pay the medical bills on time, and now your phone is ringing off the hook. Many Americans find themselves in this situation. The creditor’s keeps calling and the debt just keeps growing.
Bankruptcy is one of the alternatives available for relieving financial distress. It is a serious legal procedure and needs lots of both technical and legal help. Let us first explore about the alternatives to bankruptcy. Some people in this financial distress can improve their situations simply by contacting and directly negotiating with the creditors. Others may seek help with reputable consumer credit counseling services which have experienced negotiators with the creditors and formulating and establishing repayments plans. Bankruptcy should be taken as a last resort and not the first thing in this distressed decision making time.
Alternatives to Bankruptcy
A creditor might be willing to give you a break in giving more time for your payments. Also, a creditor might be willing to settle for cash a large onetime payment for the total debts. Again, it might be willing to settle its claims in exchange for partial cash payments, or it may be willing to extend the terms of the payments. These extensions and smaller payments over a considerably larger period of time may give you some relief.
Are you judgment Proof?
A judgment proof person is one who has not many tangible assets and most of his income is exempted already from garnishment. Again a judgment proof person has little or no money, no assets and no property that he would be unable to pay even if a judgment by a court of law is rendered against him. There are wide varieties of both state and federal laws which can make him/her exempt. When creditors would do their final analysis, they would consider it more convenient not to go after this judgment proof person because there is nothing they can take by way of judgment enforcement and execution. It is a futile exercise and waste of money seeking judgment against judgment proof folks. Your creditors would spent considerable amount of money in obtaining both judgment and then executing, and would be shocked and embarrassed when they don’t find any way to execute this against you. But your creditors may come back and keeps looking for avenue to satisfy your judgment sooner you get more property than what it originally made you a judgment proof individual.
Contacting your creditors
Again, it is a good idea to contact your creditors directly if you have more assets than a judgment proof may have. No need to hide them. It is good to pick up the phone and talk directly to your creditors. You can request a reduction in your monthly payments, as well as reduction in your interest rate. You also can obtain the help of some of the reputable credit counseling agencies. You can find the nearest CCCS by calling 800-388-22277 or by visiting http://www.nfcc.orga. Some do charge some money, but it is worth to pay this amount in exchange for very valuable help. Make sure you read all the finger prints and ask lots of questions. THE CCCS make repayment plans which are distributed among your creditors until your debts are fully paid. It can be lengthy time which can also repair some of your damaged credit and increase your FICO scores. Please be careful, however, with the for-profit agencies. Sometime there are sharks sitting in these turbulent waters. Keep in mind and look for predatory debt counselors. Be sure to check their references in the Better Business Bureau and ensures that it is approved by the US trustee for credit counseling in the bankruptcy operations.
What things to be considered in debt consolidation?A debt consolidation can ideally be too true, but it still is ideal for folks who do not like to declare bankruptcy and especially if their debts can be managed and they have the paying capacities. One should be careful in having a permanent interest rate when consolidating their debts. Again, watch out for a prepayment penalty? Are you surrendering something like a plastic card for permanent use? It is not a bad idea to do that. It is not worth any consolidation, if you keep on using your credit cards during this time. It is good to put them in a shredder once for all.
Can you Do Your Debt Consolidation at Your Own?
Of course, you can do it. You can at least do one habit right away. Start watching the financial news and read some good financial magazines. Pick up the phone and talk to your creditors and tell them your desire to consolidate debt. They would let you talk to some important and knowledgeable person. If you are eager to find a resolution, your creditors would also be eager to lend you a helping hand. You can always ask your creditors to forego the late fees, the penalties. Get everything in writing before making payments. Never give them the access to your checking account numbers

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