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debt scams

Stressed Over Bills? Get A Cash Advance Now!

Debt got you down? You're not alone. Consumer debt is at an all-time high. What's more, record numbers of consumers -- nearly 1.5 million in 2001 -- are filing for bankruptcy. Bankruptcy is one option to deal with financial problems, it's generally considered the option of last resort. If you're having trouble paying your bills, consider these possibilities before considering filing for bankruptcy:

  • Contact a credit counseling service. These organizations work with you and your creditors to develop debt repayment plans. There are many reputable credit counseling organizations that will work with you to solve your financial problems.

  • Carefully consider a second mortgage or home equity line of credit. While these loans may allow you to consolidate your debt, they also require your home as collateral. Refinancing a home is much easier today than in the past: often, refinancing your home is just a few clicks away. There are a variety of reputable lenders for both debt consolidation, home equity loans and home equity lines of credit. For your reference:

    • Home equity loans: Ameriquest Mortgage, Low-Cost Lending, and E-Loans
    • Home equity lines of credit (HELOCs): Quicken Loans and E-Loans
  • If none of these options is possible, bankruptcy may be the likely alternative. There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. The current filing fees are $185 for Chapter 13 and $200 for Chapter 7. Attorney fees are additional and can vary widely. The consequences of bankruptcy are significant and require careful consideration.

Chapter 13 allows you, if you have a regular income and limited debt, to keep property, such as a mortgaged house or car, that you otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to pay off a default during a period of three to five years, rather than surrender any property.

Chapter 7, known as straight bankruptcy, involves liquidating all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. Some property may be sold by a court-appointed official-a trustee-or turned over to creditors. You can receive a discharge of your debts under Chapter 7 only once every six years.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

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