Monday, December 14, 2015

Are You Thinking Of Bankruptcy

Filing bankruptcy is one way people deal with their debt. However, it can have serious and long lasting consequences. The filing remains on ones credit report for at least seven years. In some cases it will remain on a person's credit history for up to ten years.

Because of recent legislation, it is not as easy to file as it once was. The filing has to be approved by the judge. There are many factors that will be examined. If it is determined that the person who has filed has the means to pay off the debt, then the filing might be denied.

People who are looking for a quick way to extinguish their debt might find that their filing is not approved. If the filing is approved, there are of course advantages. The person filing no longer has any debt to pay off. Creditors will not be calling or harassing the debtor.

Some have heard that once a person has declared insolvency that he will not be able to get credit or be approved for a loan. This is not necessarily true. Some credit institutions will give a credit card to a person who has filed. But of course the interest rate will be very high. There are some lenders who will approve a loan, but again the interest rate will be well above the normal rate.

There are alternatives to filing insolvency. Most people need to file because of their heavy credit card debt. There are companies that will negotiate with creditors on behalf of the debtor. If a person has more than ten thousand dollars in debt on a particular credit card, he might be in a position to negotiate a lower balance a lower monthly payment.

Lenders will sell to collection agencies unpaid loans for ten to twenty cents on the dollar. This can be a loss of up to ninety percent for the credit card company. A negotiator might be able to get the credit card company to accept half of the amount owed; explaining that if the creditor has to sell the loan to a collection agency they the card company would get a lot less than fifty percent of the balance which is what the debtor is offering.

The negotiator will also inform the creditor that the debtor is considering filing for insolvency. If this happens and if it is approved, the debtor of course will receive nothing. The negotiator will explain to the creditor that if the debtor can get that company, and others to agree to some form of settlement, that the debtor will not have to file and the creditors are more likely to get some of their money back as opposed to nothing if the filing is approved.

Filings for bankruptcy are on the rise because of the bad economy. Many people have lost their job. Many cannot pay back loans or pay the balances on their credit cards. This is why more creditors are willing to negotiate a settlement. The creditors will rather take a percentage of what they are owed rather than get nothing at all.

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