The Choice between Bankruptcy and Debt Settlement

2) Debt settlement offers as a rule came in under 50% of the original balance of debt, an improvement over the 60-60 (60% percent of debt balances paid off in 60 months) rule and other forms of debt relief, generating significant consumer benefits.

This encourages a second look at the person's finances and the circumstances regarding the debt rather than just rushing to have them discharged. A comparison of the debtor's finances against the average income of the state's population plays a major role in the investigation.

The hardest part about filing for bankruptcy is that it may be difficult to get a new loan afterwards. Under Chapter 13, it will take 3-5 years before you can even apply for a new loan. The great thing about a Chapter 7 bankruptcy is that you can be eligible for a new loan as soon as your bankruptcy has been completed.

There are 5 factors that consider whether tax obligations are equipped for staying dismissed by bankruptcy. An income tax debt will need to adhere to all the five of these specifications before it can be thought to be dischargeable. The earliest 2 of the 5 considerations tells you that a debtor will not provide any taxation that can be beyond 3 years previous which the tax returns should have been filed a minimum of 2 years back.

When you file for Chapter 7 bankruptcy, you will have the chance to reaffirm some of your secured debts. A reaffirmation agreement allows you to work with your lenders to rearrange some of the terms of your loans. For example, with an auto loan, your lender might be able to lower your interest rate or the length of your loan term. This can make payments more manageable to allow you to catch up on your payments and make them in full going forward.

If you find a buyer, the trustee will allow the sale, but only if he can be convinced the price is at fair market value (FMV). He needs an appraisal, because homeowners could sell their assets below market value prior to their filing. It is the trustee's responsibility to make sure this doesn't happen by checking bank statements and the public records back six months and sometimes longer. If such a sale took place, the trustee could have the deed voided and the sale reversed. This would be very inconvenient and costly for the new homeowner and the petitioner.

If a claim for bankruptcy is dismissed it means that those who attempted to file for bankruptcy are still liable to pay the creditors any money which is owed. The debtors will be expected to pay the creditors as usual, without any legal stipulations that state otherwise. Debt consolidators find a prime target in those who have had bankruptcy claims dismissed. Credit report firms use information from bankruptcy as part of the data that forms your final credit score. As such, the loans you can receive will be dramatically affected by any previous bankruptcy you have experienced.