If you feel like you’re drowning in debt, you’re not alone. Whether you’re behind on bills as a result of job loss, poor budgeting or illness, debt can seem overwhelming. In your efforts to get out of debt, you’ll probably see a few advertisements for ‘quick fix’ debt relief programs. However, most of these programs tout bankruptcy as a solution, but don’t tell you that until you’re enrolled. Bankruptcy can have severe negative effects on your credit for up to ten years, and can keep you from getting a house, a car or a job. When looking for debt relief in Lancaster PA, it pays to shop wisely and to consider these possibilities first:
Negotiate with your creditors, who may be able to work out a payment arrangement.
Talk to a credit counselor. They work with you and creditors to put together a repayment plan. These plans require you to make a payment each month to the counselor, who disburses that money to your creditors.
Carefully consider your choices before applying for a HELOC or second mortgage. These loans may help you consolidate debt, but you run the risk of losing your home.
Bankruptcy as a Last Resort
If none of the above steps work for you, bankruptcy may be your only option. There are two personal bankruptcy types: Chapter 7 and Chapter 13. Each is filed in bankruptcy court, with hundreds in filing fees. Attorneys’ fees are extra, and can vary widely. The bankruptcy law changes of 2005 give consumers more motivation to seek Chapter 13 instead of Chapter 7. Chapter 13 allows you to keep some property if you have enough income, and also allows you to pay your debts over up to a five-year period.
Chapter 7 involves the selling of all non-exempt assets. Exemptions typically include work tools, cars, and basic household furniture. Some property may be sold by a trustee, or given to your creditors. The new laws have changed the time limit for filing for Chapter 7; you have to wait at least eight years between filings. Chapter 13’s wait is shorter, being as little as two years in some cases. Both bankruptcy types can stop foreclosure, repossession and wage garnishment, but both come with restrictions. Mitchell A. Sommers ESQ P.C. can evaluate your case and recommend the best course of action.