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Bankruptcy Alternatives Blog
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Wednesday, November 05, 2008
How to Get Out of Debt Fast Without Going Bankrupt
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Many people believe that personal bankruptcy is their only alternative when they have too much debt. While bankruptcy is necessary for some people, there are other options. (To learn more, Canadians should research bankruptcy in Canada, and Americans can also read more about personal bankruptcy).
A debt consolidation loan is an option for many people, where you combine all of your high interest debts, like credit cards, into one lower interest rate consolidation loan. In most cases you need good credit, or a co-signer, to qualify, so a debt consolidation loan will not be the solution for everybody.
A debt management plan through a not-for-profit credit counselor is another option to repay your debts and avoid bankruptcy. In many cases the credit counselor will negotiate a low or zero interest plan, so all you do is repay the principal with no further interest.
If you can't afford to make a debt management plan, Americans can consider a Chapter 13 Wage Earner Plan, and Canadians can consider a consumer proposal to repay a portion of their debts. It is only after considering all alternatives that bankruptcy should be considered.
There are other approaches, so please read our special report on How to Get Out of Debt Fast Without Filing Bankruptcy today for more information.Labels: get out of debt fast without filing bankruptcy
Posted by Bankruptcy Alternatives Blog
@ 10:41 AM
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Saturday, September 27, 2008
What are my bankruptcy alternatives?
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As the North American economy continues to weaken, and every day we read news of bailouts, we get even more worried about our own personal financial situation. What can we do? If you are experiencing money problems and you think that personal bankruptcy is your only alternative, start with our five step program to avoid bankruptcy.
First, make a family budget. If you don't know where your money is going, you can't decide what spending to cut to free up cash to repay your debts on your own. Read our special report on budgeting for more information, and for some free tools to help you budget.
If your budget shows that you can afford it, your next step may be to try to get a debt consolidation loan. With a debt consolidation loan you consolidate your debts and make one monthly payment, at a lower interest rate than you are paying now. You need good credit to qualify.
If you don't have good credit, your next option would be to consider credit counseling through a non-profit credit counsellor about a debt management plan. They may be able to work out a plan where you repay your debts over a longer period of time, at a reduced or zero interest rate.
If that isn't affordable, a legal procedure may be necessary. In the United States you could file a Chapter 13 Wage Earner Plan. In Canada you could consider a consumer proposal. Either way, it may be possible to negotiate a legal settlement where you pay less than the full amount owing.
If even that is not affordable then, and only then, should you consider personal bankruptcy. Bankruptcy is a last resort, only to be considered if all other bankruptcy alternatives have been considered. You have options, so consider them wisely, do your research, and then make the decision that is best for you and your family.Labels: bankruptcy alternatives, Chapter 13 Wage Earner Plan, consumer proposal, credit counseling, debt consolidation, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 5:40 AM
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Friday, August 01, 2008
Chapter 13 Wage Earner Plan: A great Chapter 7 bankruptcy alternative
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A Chapter 13 Wage Earner Plan is one of the best alternatives to bankruptcy for resident of the United States. It is similar to a consumer proposal which can be filed by people who live in Canada. How Does a Chapter 13 Wage Earner Plan Work?
When you file a Chapter 13 wage earner plan, you are making a deal with your creditors to pay back all or some of what you owe them under a payment plan that you can afford. It is meant for people who earn regular wages but just can't quite make the payments on their debts each month. The Chapter 13 bankruptcy can last up to five years. Once you file a Chapter 13 petition with the court, an impartial trustee will be appointed to administer the case. They will evaluate your situation and help develop your plan and present it to your creditors who will then decide whether they will accept it or not. Typically, if you have taken the time with the trustee to be well-prepared, there will not be a problem with your proposed plan. Now, instead of making multiple monthly payments on your many debts, you will make just one to the trustee either monthly or bi-weekly, who will then distribute it among your creditors as has been agreed upon. Who is Eligible for a Chapter 13 Wage Earner Plan? Any individual person (not a corporation or partnership) is eligible for Chapter 13 relief as long as the amount of their debts does not go above $307, 675 for unsecured debts (those with no collateral) and $922, 975 for secured debt and they are earning wages that cover more than their reasonable living expenses. The person must also have received credit counselling from an approved agency within the 180 days prior to filing and had not been dismissed from another type of bankruptcy filing in this time period. Why is it a Chapter 13 Wage Earner Plan a good idea? The best thing about a Chapter 13 is that it helps avoid filing for Chapter 7 bankruptcy. By extending the length of time you will take to pay off your debts, your monthly payments will be smaller making it easier for you to get out of debt. Chapter 13 also offers the convenience of consolidation because you only make one monthly payment to the trustee who will deal with all your creditors for you. Once you have filed the petition, the creditors are no longer allowed to take any action against you in order to collect their payments. The process of filing a Chapter 13 Wage Earner Plan is complicated and the rules change frequently. For example, the maximum amount of debt allowed to qualify is adjusted to reflect changes in the consumer price index. You should seek help from a professional to make sure you have all the information you need about a Chapter 13 before you file the petition with the court. Labels: Chapter 13 Wage Earner Plan
Posted by Bankruptcy Alternatives Blog
@ 11:40 AM
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Saturday, July 19, 2008
What are my bankruptcy alternatives if I own a house?
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In 2008 in North America the real estate market has fallen significantly. Over 1 million homes in the United States are currently under foreclosure, and the numbers are falling in Canada as well. What can you do if you own a house, but can’t afford to pay the mortgage an all of your other debts?
First, you could sell your house. If you can sell it and get enough money to repay the mortgage, that might be your best bankruptcy alternative. Sell now, before your house falls even more.
Second, you could attempt to negotiate with your mortgage lender. They do not want to foreclose on your house, so they may be willing to extend your mortgage or give you more flexible payment options. You will not know unless you ask.
Third, you could attempt to get a debt consolidation loan to deal with all of your other debts, which may give you enough free cash to stay up to date with your mortgage payments. It may even be possible to get a mortgage debt consolidation loan to reduce the interest you are paying on your mortgage.
Fourth, you could file a consumer proposal or Chapter 13 Wage Earner Plan. Again, this deals with your other debts, not your mortgage, but it may give you enough financial flexibility to keep up with your mortgage payments.
Finally, if all else fails, it may be necessary to file personal bankruptcy. Every situation is different, so you will need to research to determine if you will lose your house if you file bankruptcy; the answer will depend on the value of your house, and the amount you owe on the mortgage, and where you live.
As you can see, you have bankruptcy alternatives when you own a home. To find out more, if you live in Canada, contact a bankruptcy trustee, or if you live in the United States, contact a bankruptcy attorney.Labels: bankruptcy alternatives, consumer proposal, debt consolidation
Posted by Bankruptcy Alternatives Blog
@ 1:17 PM
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Monday, April 07, 2008
What if I Just Stop Paying My Debts? Is Not Paying a Good Bankruptcy Alternative?
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At some point in almost everyone's life we get to the point where we just through up our hands and say "Enough: My debts are too high, so I'm just going to stop paying!"
For some people that may be the correct option, but it does have one significant danger: If you stop paying, it is possible that your creditors will take you to court, sue you, and attempt to garnishee your wages. If you own property, like a car or a house, they could attempt to put a lien on your property, seize it, and sell it to repay your debt.
If you currently own no property or have no wages, you are "creditor proof", so doing nothing may be an option. If you get a pension or welfare, it is unlikely that those payments can be garnisheed, so there may be little risk of a garnishment. You could open a new bank account at a new bank that is not known to your creditors, and continue on until your situation changes.
However, if you do have a job, doing nothing is probably not the correct option for you. You need to take action. Try contacting your creditors and working out a repayment plan. If you need help, a credit counselor can meet with to determine if a debt management plan is the correct solution for you. If you still have good credit, a debt consolidation loan is another possible option.
If you live in the United States, a Chapter 13 Wage Earner Plan is a good personal bankruptcy alternative. In Canada, a consumer proposal is an excellent solution in many cases.
The point to remember is that doing nothing may be an option, but there are many other bankruptcy alternatives, so research your options and decide on the option that's best for you.Labels: bankruptcy alternatives, Chapter 13 Wage Earner Plan, consumer proposal, credit counseling, debt consolidation, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 7:37 AM
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Monday, January 28, 2008
Debt Management Plans and Consumer Proposals: Which is the Better Bankruptcy Alternative?
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Note: a consumer proposal can only be filed in Canada. Americans can consider a similar procedure called a Chapter 13 Wage Earner Plan.
At first glance a debt management plan and a consumer proposal appear to be very similar. In both cases you make payments each month that are distributed to your creditors, so they are both a good bankruptcy alternative. There are, however, some significant differences.
A debt management plan is administered by a credit counsellor, while a consumer proposal is administered by a bankruptcy trustee. A bankruptcy trustee is an officer of the court, and therefore has the power to force creditors to accept the proposal. Here is how it works:
In a consumer proposal, each creditor gets one vote for every dollar they owe. If more than half of the dollar value of creditors votes yes, all creditors must accept the proposal. In a debt management plan, even if eight out of nine creditors vote yes, there is no way to force the final creditor to accept the plan. For that reason in most cases a consumer proposal is the preferred bankruptcy alternative.
In addition, in a debt management plan the creditors generally must be paid in full. In a consumer proposal it is often possible to get the creditors to agree to accept 50 cents on the dollar, or even less.
To file a consumer proposal you must be insolvent (owing more than you own, and being unable to pay your debts). Insolvency is not a requirement for a debt management plan, so that may be a reason to select the debt management plan option.
Which bankruptcy alternative is right for you? Contact a proposal administrator or a credit counsellor for more information.Labels: Chapter 13 Wage Earner Plan, consumer proposal, debt management plan
Posted by Bankruptcy Alternatives Blog
@ 10:24 AM
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Saturday, October 27, 2007
Wage Earner Plan: How Can a Chapter 13 Wage Earner Plan Help Me?
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Chapter 13 of the federal bankruptcy laws gives individuals the right to propose a plan to their creditors to repay their debts. Chapter 13 is also known as a Wage Earner Plan, because it is usually filed by people who earn wages, and they use some of their wages each month to repay the creditors. (Under current law the owner of an unincorporated business can also file a Chapter 13 Wage Earner Plan). Chapter 13 is a great alternative to bankruptcy.
Wage Earner Plans are only available to residents of the United States. Residents of Canada should consider a consumer proposal, which is a very similar procedure.
To qualify under Chapter 13, an individual must have unsecured debts (those not backed by collateral to guarantee their repayment) of less than $100,000 and secured debts (debts backed by collateral, such as a house mortgage) of less than $350,000. A debtor files a Chapter 13 petition listing all debts. Upon the filing, the debtor's creditors must stop their collection activity while the creditors vote on the plan.
A typical Chapter Thirteen petition would include a repayment plan that lasts up to five years, and is funded by both the debtor’s wages, and by the sale of property of the debtor if applicable. The plan is supervised by a bankruptcy trustee, and must treat all creditors fairly, meaning each unsecured creditor will receive the same number of cents on the dollar.
The repayment plan may require the debtor to pay off only a portion of each debt, or the debtor may receive extra time to repay their debts, or they may receive both lesser payments and an extension of time.
It is these reduced payments that are the big advantage of a Chapter 13 Wage Earner Plan. If you can’t afford to make the full minimum payments of say $1,000 per month on your debts, but you could afford to pay $500 per month, a Chapter 13 Wage Earner Plan may be a great solution.
Even better, the Chapter 13 plan can be approved only by the court; the creditors can object, but the final decision is left to the court. After you have completed all of the payments, you are discharged from all of your debts, except for debts relating to alimony and child support, federal student loans, and taxes.
If you need a break, a research how a Chapter 13 Wage Earner Plan may be the correct bankruptcy alternative for you and your family.Labels: Chapter 13 Wage Earner Plan, consumer proposal
Posted by Bankruptcy Alternatives Blog
@ 6:14 AM
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