There are many agencies out there promoting their services on debt relief and offering all kind of solutions to eliminate debt. But not all solutions are efficient and some may even make things more complicated. When it comes to such important issues, it is a good idea to use the advice of those who know about the subject. Let's see what the Federal Trade Commission suggests on this particular topic.
The main thing that the FTC suggests is that you postpone the decision of filing for bankruptcy till after you have analyzed all the other alternatives out there. This is due to the fact that bankruptcy should be considered a last resort and the FTC strongly suggests against taking that path unless absolutely necessary because the detriment that it implies to your financial and credit situations is overwhelming.
Three Options To Obtain Debt Relief
The first alternative that the FTC suggests as means to obtain debt relief, is to talk with your creditors. Sometimes you are entitled to change the terms on your repayment program by the very contract you signed or due to the law. And even if you are not, a lender will certainly prefer to negotiate a new repayment program than to pay the costly charges of collector agencies or the legal costs of a court case.
If you are not comfortable with the above task, you can hire a credit counseling agency. These agencies will negotiate with your creditors for you and they'll put their expertise to work so as to get for you new repayment programs, lower interest rates and sometimes even cuts on your debt interests or principal. Some of these organizations are non-profit and charge little or no money but even those that are not, won't charge you high fees and will save you a lot of money.
The FTC suggests, as another option, to consider a second mortgage or home equity line of credit. These two alternatives are financial products based on equity that provide a fair amount of money at very reasonable rates and with a flexible repayment program. However, the FTC also states that these options should be considered carefully because the loans and lines of credit based on equity are secured with your property and thus, you risk repossession if you fail to repay the money.
Costs And Other Considerations About Bankruptcy
If the above alternatives won't do any good for you, then, bankruptcy may be the only choice. Bear in mind however, that bankruptcy is not a simple or inexpensive process. There are two types of bankruptcies: Chapter 13 and Chapter 7. The filing fees are around $300 dollars, chapter 13 being slightly cheaper. Chapter 13 provides you with some benefits like the possibility of keeping a mortgaged property and work out a repayment plan to cancel your debts with advantageous terms without having to surrender all of your assets.
Chapter 7, on the other side, is a straight bankruptcy where all your assets are sold in order to repay your debts and only after all your debts are canceled the remaining (if any) is handed over to you and your bankruptcy is discharged. Bear in mind also that not all debt is erased with a bankruptcy process and you won't be able to keep all your assets; not even with Chapter 13.
