A few years back credit was so loose that people could even get a credit card for their dog. Why pay with cash when you can put it on credit and pay for it later. Not only credit cards, but there were attractive mortgage loans allowing individuals to buy a home that would be normally way beyond their means. Many consumers got sucked in by these loan schemes. Because of that, millions got caught in a situation where their monthly income was less than expenses for the month. It's a bad situation to be in when you can't even make your minimum monthly payments. People that got caught up in this situation, depending on their income, might be a candidate for bankruptcy. However, there are other alternatives to filing bankruptcy. Filing for bankruptcy is an extremely tough decision to make. While bankruptcy should make you debt-free, it will also negatively affect your credit for up to 10 years.
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In the last few years, there has been a huge marketing campaign for debt settlement companies. The basic campaign is, "Who wouldn't want to settle with their creditors for pennies on the dollar?" The premise of debt settlement is not always the truth. Debt settlement companies claim you can wipe out all of your debts without filing bankruptcy. The ads and the telemarketers try to offer hope with no real guarantees. There have been many unscrupulous companies entering this market that take the last money from people to offer a settlement with their creditors. Later, the debtors might find out that no deal was made and their money is gone. Any time someone offers the benefits of bankruptcy, with no risk, you should question it. There are some legitimate nonprofit financial advisors and debt settlement companies that will help negotiate deals with your creditors and help you create a budget for the future.
When being in financial trouble, it's important to figure out your income to debt ratio. This will help you make future financial decisions with confidence knowing you'll be able to afford it. Lenders use this same ratio when determining whether or not you will qualify for a loan. Knowing this monthly ratio can help stop an individual from making impulse purchases. When going to the mall you will think about that payment you will have at the end of the month, and see that will hurt the amount of extra cash you have to live on, if any. It's also good to stretch it out to an annual debt to income ratio for making larger purchases such as a car, a house or even moving into a more expensive rental property. The bottom line is, if a person wants to stay out of trouble they need to lower this ratio and not increase it.
When your income to debt ratio is basically one-to-one you probably have no other choice than to file for bankruptcy. After exhausting other options it would be good to take a pre-bankruptcy counseling course along with consulting a bankruptcy attorney to give you advice on your situation. Understanding how the bankruptcy process works will save you much frustration through the process. It will also help you from making deadly mistakes that will have long-term ramifications because of the bad decisions. Learning the basics of bankruptcy, money management, and techniques that will help you understand your finances better will get you back on track faster. After the bankruptcy is finished you will receive a discharge making you debt free and hopefully you won't fall back into the same hole that got you into trouble with debt.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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