Bankruptcy vs debt consolidation, which one is right for your current debt problems?

Chapter 13 Bankruptcy is an option for people facing foreclosure. While it is true filing bankruptcy can halt the foreclosure process, it is not without risk. If you fail out of bankruptcy you will lose your home, so it is very important to understand how Chapter 13 works. Upon approval of the Chapter 13 bankruptcy repayment plan, the individual must submit regular payments to the Trustee until the reorganized debts are paid in full.

For those who feel that they are in serious financial distress, bankruptcy may have crossed their minds. Bankruptcy is not something to be taken lightly. While your debt may be wiped clean, there are far-reaching consequences for that “new freedom”. When a person’s debt has risen to a level that they can’t hope to get under control, they may consider filing for bankruptcy. For a consumer there are two bankruptcy choices: Chapter 7 and Chapter 13.

If you are overwhelmed by debt, there are a number of solutions. The most drastic of these is filing bankruptcy. I want to encourage you to make sure that you have examined all of the available options, including credit card debt couseling, debt settlement and negotiation before you go down this road. In recent years, the stigma surrounding filing bankruptcy has lessened somewhat. However the effects are financially devastating, and long ranging.

Chapter 13 bankruptcy is frequently also known as reorganization bankruptcy and also as a wage earner’s plan. This allows individual consumers to work out a repayment plan for their debt which is supervised by the bankruptcy court. With this type of bankruptcy, consumers are given a period of time, usually three to five years, to repay all of the debt they have incurred. One of the bright spots of this particular chapter of bankruptcy is that creditors are not allowed to call you, harass you, or start any type of collections proceedings.