Advertisements Speaking About Consumer Debt Relief

By: Usha Pradhan

Are you down with consumer debts? Hey.... you're not alone; presently consumer debt is at a record high. What's more, for a huge number of consumer debts, people, more than 1.5 million in 2004, are filing for bankruptcy.

While you find some ads throw the promise of consumer debt relief, it might just be the suggestion to declare yourself "bankrupt". Even though bankruptcy is one choice to deal with financial problems, you should consider that as your last resort as that would bear a long-term negative impact on your creditworthiness. This can really hold back your ability to get credit, a job or even a place to live; and it's really creates bad impression on your credit score. Remember your credit score reflects your creditworthiness. The score is an assessment of how likely you would pay your consumer debts.

Here is a warning from the Federal Trade Commission -

Always try to read between the lines when you face with ads that say:

&bull"Combine your consumer debts into one monthly payment without borrowing."
&bull"STOP consumer debt nuisance, foreclosures, repossessions, tax levies and garnishments."
&bull"Clean out your consumer debts! Consolidate your bills!"

What you would find later is that those phrases about consumer debt assistance, in most cases involve filing for bankruptcy respite, which not only impair your credit but also cost you the attorneys' fees.

Consider these possibilities before you consider filing for bankruptcy:

&bullHave a talk with your creditors. Who knows they may be ready to work out a customized payment plan.

&bullYou can also consider contacting a Relief counseling service. The organizations providing such services mediate between you and your creditors to build up consumer debt repayment plans.

&bullConsidering a second mortgage or home equity line of credit can also be a good idea. With these you can consolidate your consumer debt, but it may require your home as collateral.

Laws to think about:

Federal Law, Chapter 13: This chapter on the Bankruptcy Code states how debtors can repay consumer debt according to a plan accepted by the debtor, the creditors and the court. If you have a stable income, this Chapter offers the terms to repay your consumer debts in a 3-to-5-year period, instead of conceding any property.

Federal Law, Chapter 13 & Chapter 7: Both these chapters provide terms to clear of your unsecured debts and stop foreclosures, repossessions and consumer debt collection activities. These two chapters also give you exemptions where you are allowed to keep certain assets. But, you must know that exemption amounts do differ from state to state.

Also, you must know that if you do not have a satisfactory sketch to catch up on your consumer debt under Chapter 13, bankruptcy usually does not permit you to keep property if your creditor has an unpaid mortgage or security lien on it.

If in case, you find none of the above options possible, bankruptcy may be the likely option.

Debt, Loans & Business Cashflow
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