Should you Consider Debt Consolidation – and Will it Hurt Your Credit Score?

Lenders often encourage people to consolidate credit card debt by taking a second mortgage on their homes – thus spreading payments out over more years, generally at a much lower interest rate.

Sometimes the same company that issued your credit card will encourage you to switch to a home equity loan. They love it because this is a secured loan – unlike credit cards, which are unsecured. They also love spreading your payments out over a longer period of time, because then a larger percentage of each payment is interest (otherwise known as profit to the lender.)

The lender will point out that home equity loans are tax-deductible, so you’ll be saving money. Be careful with that one, as the rules have changed and you may have to prove that the home equity loan was used to make improvements on your home.

So… Should you do it?

The first question you must ask yourself is this: “Do I have the discipline not to turn right around and run up my credit card debt again?” If the answer is no, then no – you should not do it.

What will this new loan do to my credit score? That depends on question #1 – along with the amount of the new credit line you actually use.

For instance, if you have $50,000 equity in your home and are granted a second “revolving credit” line of $35,000, you have just acquired a higher amount of available credit – which is good for your FICO score.

However, if you use every bit of it, that’s not so good. FICO scoring is a bit of a mystery, but the overall consensus is that you should never use over 30% of available credit on any one account.

Can you eliminate those high credit card payments by using 30% of the credit available from your revolving home equity loan? Then it’s a good idea. From that point on, use your credit cards, but pay them off each month when the bills come in. And of course, never charge more in any one month than 30% of their available balances.

Get your free credit report right here at CreditScoreQuick.com and read it carefully. Add up the balances you owe, and consider how large your home equity loan would be. If it all makes sense, then check with several Second Mortgage lenders to compare interest rates and programs before you make a decision.


Author:Mike Clover
CreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.

Can debt consolidation improve your credit score?

There are a few options when you are trying to eliminate debt. You probably have heard of debt consolidation. This really is not the solution for getting rid of debt problems. In this article I am going to discuss five options and out of the five only one works the best.

Our option.
We provide a service that is a proven-debt elimination process to help you become debt free typically within 36 months. A service expert will design a debt-relief program that is right for your unique situation. This expert will assist you through the entire process.

Debt Consolidation
A debt consolidation solution is flawed. You borrow money to fix a borrowed money problem. Lenders and banks offer these programs because they make money. This is supposed to reduce your debt; all it does is prolong your debt.

Consumer Credit Counseling Services ( CCCS)
A credit card company originally created Consumer Credit Counseling Service (CCCS) in the early 1980’s to recover money from consumers that have fallen behind on payments. CCCS disguised itself as a non-profit entity to hide the fact they are actually a bank. Statistics show the more than 50% of the people that start this process fail to finish. CCCS seeks to collect as much money as it can and they charge the consumer a fee for the service, often under the heading of a voluntary contribution.

Bankruptcy
In 2005 congress passed a new bankruptcy law that made it tough to file bankruptcy. At times bankruptcy will be on your credit report for 10years. Not to mention all the fees involved with an attorney and credit counseling classes it usually requires.

Do nothing
This is not a good option. If you decide not to do anything you can count on the situation getting worse. Eventually you could be facing court orders which will ultimately result in wage garnishment or even judgments. If you are ready to take control of you financial destiny click here today!

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Do you really need to file bankruptcy?

Current reports show that bankruptcy filings are at an all time high. This is probably due to the fall of the real estate sector, which affects everything. The way the current bankruptcy law is, does it really protect you and is it necessary? I personally don’t think bankruptcy is necessary for individuals. Bankruptcy for one will destroy your credit report and credit scores. There are two types of bankruptcies for individuals, and they are Chapter 7 and Chapter 13. The most common now with the new law in place is Chapter 13. Chapter 13 forces you to pay back a porting of your debts usually over 5 years to a court appointed trustee. With all the creditors currently having records defaults, you would think that some kind of resolution is in order with the actual creditor on your own. This is actually true; you can call and negotiate with your creditors a lesser balance and a payment plan. Plus if you have retirement funds you don’t have to liquidate them. With bankruptcy you do.

Disadvantages of bankruptcy
If you have wracked up a bunch of unsecured debt, you can assure yourself calls all day from creditors if you don’t pay them. Bankruptcy will stop the calls but it does not change the fact that the negative record will be on your credit report for 7 years if it is Chapter 13. If its chapter 7 it will stay on your credit report for 10 years. So depending on what your situation is, I think in most cases bankruptcy is not necessary. If you have found yourself in financial trouble you can call your creditors and negotiate an affordable payment plans on your own. In most cases you can reduce 40 – 60 percent of what you actually owe to credit card companies with a fixed interest rate and low payments. So do you research before you jump into a bankruptcy and pay a bunch of money to an attorney for no good reason.

Advantages of bankruptcy
If you file bankruptcy the phones calls with stop. It will also stop creditors from taking you to court. You have the option under the bankruptcy laws to file every 6 years. Most lawyers will tell you that the bankruptcy laws are in place not to protect you but the creditor. So keep this in mind. If you are able to file chapter 7 bankruptcy, this will liquidate all your debts with no obligation to pay anything back. This chapter bankruptcy is harder to file now due to the income restrictions. So don’t think bankruptcy is the easy way out now, because its not. I personally think the only advantage is it will stop the harassment from creditors.

Just remember you can negotiate with your creditors yourself, and it cost you nothing but your time. You can also get a payment plan in place you can afford. Creditors will typically work with you to determine a budget over a period of time. Remember you owe this debt; the creditor did not rack up the debt for you. The long term affect of bankruptcy is hard on your credit report vs setting up a payment plan with your creditors and getting them to stop the interest.

There are also other options like debt consolidation. This is could be a alternative as well. Look at your options before jumping into anything.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Should we be content or should we want more?

I personally think the reason our country is in the shape it’s in is because of greed. My neighbor is from Viet Nam, and had gone without all his life until about 22 years of age. He said he came to the United States and could not believe the greed in this country. Greed is one of the biggest reasons for credit report problems currently. If you covet what someone else has instead of being content with what you have you might find yourself filing bankruptcy or in debt up to your ears. I am not trying to preach but GOD says to be happy with what you have. I personally believe if our country does not change things soon we will end up like the Romans. They were one of the most powerful dynasty’s ever, but there greed and lack of GOD brought them to an end.

If you just get what you need instead of trying to get more and more you will find that happiness with surround you. Once you are in debt its like a dark cloud over your head. There is nothing wrong with being ambitious but remember to be thankful for what you have. I know this is a great lesson for all of us, including me. The United States compared to other countries is extremely rich. Do we really need a million dollar home, or is that just showing off. Do we really need a Lexus, or is that just being flashy. Do we really need a Rolex, or is that being gaudy. These are some good questions to ask yourself. Sometimes we need to stop look around and discover how fortunate we really are. I honestly believe this would stop all the credit issues in this country. Once we are old and gray we will not take anything with us anyways.

Whether your credit is suffering or you have found yourself in debt. It happens to good people, but if we learn anything out of this mess “Be Thankful for what you have.” Alos make sure you don’t make the same mistake twice. If GOD blesses you will wealth and lots of stuff make sure you bless other people as well. Because just as quick as you received wealth you can loose it in snap of a finger.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Get out of Debt in 12 – 36 months

Is debt consolidation or bankruptcy lurking at your door? During trying times currently with the rising cost of fuel, this affects everyone financially. Maybe you have lost your job because of the real estate sector meltdown. What every your circumstances are there is a solution. Maybe you have looked at your finances coming in vs. money going out and it does not look to good. You can join the rest of America including business all over the United States. With the changes in the Bankruptcy laws it is much harder to file Chapter 7. So with the solutions we provide, you might consider a new approach called debt elimination. With this service an advisor will negotiate your current debt and in most cases cut your debt in half. This is much better solution than debt consolidation, because with debt consolidation you get a loan to pay back all creditors over a long period of time. You also pay the entire balance back to each creditor owed. You could also call the service we refer you to “debt relief.”




With the current economy we are seeing more and more businesses that are going out of business. We are also seeing an influx of families loosing their homes along with letting credit card debt go to collection. The real estate sector and high energy costs affect all other sectors of our economy. So believe me you are not the only one having issues currently. The great thing is there is a solution that is available for you. Without having to file bankruptcy or get a debt consolidation loan, debt elimination could be the solution for you and your family. The longer you wait the worse it could get with the annoying phone calls from creditors. Remember bad credit stays on your credit report for 7 years. That is a long time to wait for credit issues to disappear from your credit record.


Get your life in the right direction and get some debt relief underway. You could be debt free in 36 month.

Get out of debt today !




CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Reduce debt with Debt Consolidation Q & A

Debt consolidation is becoming the wave of the future currently. We are starting to get more and more questions about how to get out of debt. We have partnered with a company that provides a unique approach called debt elimination. This company is based here in Texas with us. CreditSolutions is the name and they have received a very powerful award by JD Power & Associates for customer service.






Q:
Hi Mike,
I am self employed and have accumulated $75,000 in consumer debt, mainly because of this downturn in the economy. I own a company where I was providing handy man work for realtors in the California area. With the current market in California, my cash flow has almost come to a stop. What would you suggest I do? I have run through my savings, and cannot pay this debt currently.
Johnny Carbelo


A:
Hi Johnny,
We have definitely seen the issues in California, and how it’s affecting people in that state. If you don’t have income coming in to pay the debt, you definitely need to look at your options. I work with a company that provides debt consolidation of a different kind. In other words they provide a service they like to call debt elimination. This would be my first step in trying to resolve your debt issues. These guys can get you out of debt within 36 months. Go to our link on the front of our website and select the get out of debt link.

CreditScoreQuick.com


About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Debt Consolidation Q & A

Debt consolidation is an option for some, but with CreditScoreQuick.com we have the resources to offer you debt elimination. Instead of paying low interest over long period of time, we can get you help where your debt is greatly reduced, so you don’t end up paying more over a long term loan.


Q: I have recently been hit by this down fall in our economy, I am self employed. I was working with builders to install alarm systems in their homes. With current credit crunch, and slow down in the real estate market, I am avoiding filing bankruptcy. I had heard you guys were a good resource for debt consolidation. I have around $65,000 in credit card debt that I can barely afford to continue to pay for. Please get me in the right direction.
Carlos Sanchez
Houston, TX


A: When you are self employed and business takes a turn for the worst, it does not take long to wrack up some credit card debt that you can’t pay. With that kind of debt I have a solution for you. We ware partnered with a company that can help you eliminate that debt, they will work with your creditors on your behalf to get you relief, and often get everything taken care of within 36 months. This company has won the JD power & Associates award for “customer service” as well. I am sure with the debt your have your credit report scores have been lowered. Click on the link below and you will be well on your way to debt elimination.
CreditScoreQuick.com

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Tips to avoid Debt Consolidation and Bankruptcy

High debt will not only affect your credit report but it will affect your personal life. Living debt free does require some life style changes for the better. Having too much consumer debt is like a black cloud lingering over you. In this article we will discuss some money saving tips so you don’t have to get into a debt consolidation program or even file bankruptcy. By following some of these money saving Tips you will be able to pay down debt and save more.







• Car Pool
With the cost of gas prices sky rocketing and no end in sight, car pooling is a great way to save hundreds of dollars each month. Find a few people that live close by and start car pooling.

• Bulk Stores
There are stores where you buy everything in bulk, like groceries, furniture, computers, etc…. By using one of these stores there is usally a membership fee once a year, but the savings will quickly recoup that cost. A bulk store example would be Sams and Costco.

• Don’t eat out
Going out to eat everyday for lunch gets very costly. If you were to bring your lunch to work everyday, could save you hundreds a month. Alos not eating out everyday will not only save you lots of money, but it could save your health. Fast food is bad for you anyways.

• Coupons
By cutting out coupons in the Sunday paper you can save a ton of money. Some stores will match or beat competitor’s offers as well. Just by taking the time to cut out coupons in the Sunday paper, you could find yourself saving hundreds as well.

• Garage Sale
If you are like most people I am sure you have the pack rat syndrome. With all that STUFF you have been saving, you could probably have a garage sale and acquire a nice savings.

• Utilities
You can save money with on utility bills by doing the following
1. Turn down the heat
2. Turn up the air condition
3. Turn off lights and TVs when not using them.
4. Turn of the water when shaving and brushing your teeth

With your credit being so important these days, make sure you are heading towards the wonderful goal of financial freedom. It will be hard to get there if you are not being frugal.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Debt Consolidation Vs. Debt Elimination

Debt consolidation can help reduce your monthly payment with multiple credit card companies, but with debt elimination you can relieve your debt and burdens more effectively by eliminating debts. Debt consolidation requires you to pay back your debts on the principal plus interest. With the service we provide you reduce you debt paid on debt balance, save money, and eliminate your debt in less than 36 months.


Debt Consolidation
Debt consolidation loans combine all debts into one payment for an extended period of time with a low interest rate, which will extend the total interest payments throughout the life of the loan.

The program we are able to provide will eliminate debt and save large amounts of money. During this process a highly trained representative will act on your behalf to resolve debt by bargaining with your creditors to negotiate a payment. An advisor will resolve debt reduction for you.

Reduce Debt Quickly
By only having to pay on a reduced credit card balance with the service we are talking about, you resolve your debt quickly. Debt consolidation typically puts all your credit card debt into a 15 to 30 year mortgage. With the interest paid on a debt consolidation you end up paying more on the balances owed due to the term.

The service we are talking about will save you more money and eliminate debt a lot quicker than debt consolidation. Plus this service will look a lot better on your credit report than a bankruptcy.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Debt consolidation and Bankrutcy Q&A

Q: I just had a foreclosure, and of course my credit is really bad now. I am about to let most of my credit cards go. I have a few questions in regards to this. How long before I can buy another house? Do you recommend I file bankruptcy or debt consolidation? I feel really bad about all of this, but my husband and I just went through a really bad divorce about 7 months ago. I am not sure what to do, I know how important my credit is, and want to get back on the right track. I have around $33,000 in credit card debt, most the result of my divorce.

Thank You,
Linda Carter
San Francisco, California


A: Hi Linda,
I am sorry to hear about your troubles, but of course there is always s solution to everything in the world of finance. In order to buy another house, it will be a minimum of 3 years from foreclosure date before you will be able to buy. Make sure you don’t have anymore credit problems, because if you do, it could be more than 3 years before you can buy again. Underwriters might suspect you are not stable if you have issues after all of the issues mentioned. Typically 3 years with good credit history you can buy a home. If you let all your credit go, you then need to re-establish credit afterwards as well. Secured credit cards are a great way to do that.

With that kind of debt, you might consider debt consolidation. I am never a fan of bankruptcy. Bankruptcy is a last resort. Even though debt consolidation in some cases is similar to a chapter 13, I know it’s looked at less harshly. Also as you are working on all of this, make sure you check your credit report. Especially if some of the debt that was awarded to your husband during the divorce are joint accounts. Even though the divorce decree says the obligations are your husband responsibility, your credit report could suffer if he is late on a payment. So stay on top of that as well. I hope this will help you get in the right direction.


About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.


About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Top ways to lower your credit score.

I think we focus so much on how to increase credit scores, we forget about what will lower your credit scores. In this article I will discuss what could lower your credit score and how to avoid it.

Late Payments
This type of activity on your credit report will destroy a good credit score. Typically when you are late on a obligation, you credit score will drop 100 to 150 points. Remember this only applies to obligations that report to the credit bureaus, not electric bills, car insurance, cable bill, or any utility bill. That does not mean stop paying them, because if you do that they will put the account in collection which ultimately will have the same results on your credit score. So don’t be late on anything.

Credit Cards Maxed out
If you have credit cards that have reached their credit limit, you score just dropped. According to FICO your credit card balances should stay well below 30% of allowed credit limit. You really should only charge on your credit card what you can pay off that month. IF you are not careful, you could find yourself needing debt consolidation because you cannot afford all your credit card debt. Make sure you keep your credit card balances low, and only use your credit cards for small purchases that you can pay off that month.

Co-Signing for someone
This is a huge problem, we all love to help out family and friends, but this is a big NO NO. Don’t ever co-sign for someone, because if they are late on a payment, guess who’s credit scores will suffer? That’s right; your credit score will suffer, because of their mistake. I see credit reports with this type of activity all the time, and it could also keep you from qualifying for a home, because that debt is really your responsibility even though you co-signed. So don’t make this costly mistake, if someone does not have the credit to buy, tell them to go to CreditScoreQuick.com to get advice on what to do.

Credit After a divorce
This is another huge problem, people getting divorces and even though the divorce decree clearly states the other spouse is responsible for the debt, it stills shows on your credit report. So if the other spouse runs into problems and is late on the payment it will affect your credit score report as well. Make sure when you file the divorce before its final the other party gets all obligations refinanced and out of your name or it could affect you in the loan run.

As always we recommend you get a recent copy of your free credit score report to make sure none of this is going on. Remember your credit is your life.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

How credit card debt can affect you?

Credit card debt is a increasing problem in the United States. The credit card companies over the last 10 years have been extending credit to everyone. Yes credit cards are necessary for credit reasons, but it is very easy to over extend yourself real quick. In order to have good credit scores the FICO score model likes to see a mix of credit which includes credit cards, but if it notices you overextending yourself your credit score will drop. So the idea is to be responsible with your credit cards. A good rule of thumb is to charge only what you can pay off that month. If you have found yourself in a world of credit card debt here are some tips on what you can do.

Credit Card Debt options
• Pay only minimum payments on all credit cards with the lowest interest rates
• Pay as much as possible on the one card with the highest interest rate. If you can pay $200.00 a month on it, pay that amount. You will pay off your debt quicker if you just pay down on one card as opposed to applying the $200.00 equally among all credit card debt. This is a common mistake.
• Look into debt consolidation programs
• Look into a chapter 13 as a last resort

What credit cards to look out for
Credit cards can be rewarding if you mange them properly. For instance you can charge on some cards and get rewards to buy other merchandise. America Express has these features, and so does discover card. Some of these cards offer low introductory rates for a period of time. All of this is contingent on your credit score and credit history. Some credit card companies offer airline miles, this is a neat perk if you travel a lot. There are lots of reasons to have a couple of credit cards, and there are lots of reasons not to as well. The point is to make sure you are responsible with the credit that has been extended to you. With this responsibility there are added benefits of charging and paying off your credit card debt every month.

What credit card debt could affect in your life
• Your ability to save more
• Your credit score
• Ability to retire early
• Ability to take vacations
• Ability to save for your kids college





Credit cards are a necessary but make sure you manage them properly or they could take over your life. If you don’t have any credit cards go ahead and apply today for a credit card that will reward you for your spending habits. Remember your Credit is your life.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Debt Consolidation vs. Bankruptcy

Maybe you are in a pinch currently and either debt consolidation or bankruptcy is lurking at your back door. You and the rest of America are having trouble currently with the down turn in our economy. Whether anyone wants to realize it or not, matters financially for most Americans could be a lot better currently. With the rise in energy costs, this trickles down into everything we buy. The result of all of this is causing a loss of jobs, people going into debt, families loosing their homes, and even bankruptcy is on the rise. The entire real estate sector has been extremely traumatized and has sent a ripple all across our country. So the point is times are tough and we understand at CreditScoreQuick. In this article we wanted to discuss the bankruptcy and debt consolidation options for individuals and families that may be having issues as a result of our current economy in the United States.





Debt Consolidation
Debt consolidation is where you get help from a third party to put all your debt into one loan typically with a low interest rate. The advantage of this is you get a payment that you can afford as opposed to letting your creditors go to collection. Obviously this is better on your credit report than just not paying it at all. As this may not be for everyone there are alternate options as well. You can also use the debt settlement method that will reduce your obligations. There are companies that will negotiate a lesser balance on credit card debt that you owe. So you might look at your options to see which makes sense for you.

Bankruptcy
Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of your filing and the later date of discharge) stay on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into financial difficulty and can’t satisfy their debts.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of April 2006, the filing fees run about $274 for Chapter 13 and $299 for Chapter 7. Attorney fees are additional and can vary.
Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait 8 years after receiving a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary by state. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And, 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 security lien on it.Another major change to the bankruptcy laws involves certain hurdles that a consumer must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness