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HomeBlog Debt ReliefBankruptcy Debt Relief – Good Idea Or Bad Alternative?
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Bankruptcy Debt Relief – Good Idea Or Bad Alternative?

December 25, 2012 by National Debt Relief

US Bankruptcy CourtAsk people who are deeply in debt what they would like most and the answer will probably be that they want to get rid of their debts. It might have been fun charging up all those clothes, electronic gadgets and expensive dinners, but it certainly isn’t fun when those credit card statements start pouring in and you find you’re seriously over your head in debt.

Filing for bankruptcy

Filing for bankruptcy could get you out from under all those credit card debts but is it really a good way to achieve debt relief? The most popular type of personal bankruptcy is a chapter 7 or liquidation bankruptcy. The other alternative is a chapter 13. The major difference between the two is that a chapter 7 will liquidate or dismiss most of your unsecured debts to give you a fresh start. In comparison, a chapter 13 is designed to give you a time out during which you would get reorganized and pay off your creditors.

What debts will a chapter 7 dismiss?

A chapter 7 bankruptcy will eliminate most of your unsecured debts. These debts are called unsecured because there is no collateral or asset involved. This includes credit card debts, personal loans, lines of credit and medical bills.

What a chapter 7 can’t dismiss

You cannot use a chapter 7 to get ride of some unsecured debts such as student loan debt. It will also not dismiss any back taxes owed to the U.S. government or your state, nor will it get rid of alimony or child support. And it cannot dismiss secured debts like a mortgage or auto loan.

What you can and cannot keep

If you have a chapter 7 bankruptcy, you will be allowed to keep the equity in your home up to a certain amount (depending on the state where you live), the equity in your automobile (again up to a certain amount), your clothes and furniture and any tools required in your work. You may be also allowed to keep some other personal possessions but this will be at the discretion of your bankruptcy judge or referee. Beyond this, you could lose other possessions that would be sold off to help pay your creditors.

The other downsides of a chapter 7 bankruptcy

There are other downsides to a chapter 7 bankruptcy in addition to the possibility of losing some prized possessions. For one thing, you will be required to take a credit counseling class. Second, a bankruptcy is a public record that stays with you forever. You could lose out on a great job 10 years from now because your potential employer found you had had a bankruptcy.

A blot that lasts 10 years

When you have a bankruptcy, it will stay in your credit report for 10 years and will have a damaging effect on your ability to get new credit. It will probably be three or four years before you could buy a house or get an auto loan. I have read that filing for bankruptcy will lower your credit score by 200 points. This means if you had a score of 650, it would drop to 450. When you do get credit again, you’ll pay a much higher interest rate due to that lower score. Your auto insurance will probably cost more – again because of your credit score.

A better option

If you have prized possessions you don’t want to lose or if you’d rather not have the stain of a bankruptcy in your credit report for l0 years, there is a better way to achieve debt relief. It’s called debt settlement and it’s where you negotiate with your creditors to pay off your debts in lump sums but for less than what you actually owe. While it, too, will have a negative effect on your credit score it won’t be as severe as the 200 points you’d lose if you had a bankruptcy. Contact us today to learn more about debt settlement and why it could be a better way to achieve debt relief.

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National Debt Relief

National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/17/2021 Charlotte: I am calling because I wanted to ask a few quick questions about your experience with National Debt Relief [unclear 0:00:27]. JOSE: It’s good. Charlotte: Now before I begin, I have to let you know that our call is recorded. Can you tell me what actually made you decide to work with [unclear 0:00:40] National Debt Relief as opposed to other providers? JOSE: Good. Charlotte: What made you decide to work with National Debt Relief, as opposed to other debt relief companies? JOSE: Aside from your reviews, I’m guessing the success of the reviews. Charlotte: Tell me about the service and the program that National Debt Relief signed you up for? JOSE: I was able to collect all my debt into one chunk and then pay it off. Also was able to get settlements lower than what the balance was. Charlotte: How easy or difficult would you say the enrollment process was? JOSE: It was pretty simple. It wasn't difficult at all. Charlotte: Now is there anything about the process that you feel could have been improved? JOSE: Not at all. I think everything went smoothly. Charlotte: Perfect. Can you give me a little feedback on your experience with your negotiator? What did you think about your negotiator? JOSE: Negotiator was really firm and fair. Charlotte: Do you happen to remember the name of your negotiator by chance? JOSE: I do not, actually. Charlotte: Okay. Is there anything about that representative stood out [unclear 0:03:04] at all? JOSE: No, not at all. Charlotte: Perfect. How comfortable did you feel working with the negotiator through this process? JOSE: Very comfortable. Charlotte: Perfect. So if you had any questions or concerns, how did the negotiator work with you to resolve any questions or concerns that may have arisen? JOSE: At this point, I really didn't have any concerns at all. So, I mean, been doing a great job. Charlotte: Awesome. So if you were gonna rate your experience with National Debt Relief so far, on a scale of maybe one to five, and five would be that you would recommend to friends and one is you were pretty dissatisfied, how would you rate them? JOSE: Is 5 the highest? Charlotte: Yes, 5 is the very highest. JOSE: Okay. Then we’ll go with 5. Charlotte: Would it be okay if I posted your comments as a review on our public web site for National Debt Relief? JOSE: Yes. Charlotte: I will also send over a link so that you can have it as a record for yourself as well. And I have you at salvipride673@gmail.com. JOSE: Yes. Charlotte: How did National Debt Relief work with you as far as setting up a payment [unclear 0:04:45]? JOSE: They did pretty good. Like I said, I have no complaints at the moment. Charlotte: How comfortable were you with the amount that you were paying? JOSE: Very comfortable. Charlotte: Perfect. Now as far as your thoughts on the cost in relation to the quality of service you received at National Debt Relief, what would you say about that? JOSE: The service team was all right. Charlotte: Now if you were going to rate your experience on a one to five, five is that you would recommend to friends and one is you're pretty dissatisfied, how would you rate them? JOSE: 5. Charlotte: Perfect. Would it be okay if I posted a few of your comments to our website? JOSE: Yes. Charlotte: Now if a friend or a family member were asking you about National Debt Relief, what would you say? JOSE: Really great people to work with. Very quick and easy, very responsive, no issues. Really makes you feel like they’re there for you. So not a scam at all. Charlotte: Perfect. Now about where are you in the process at this point? JOSE: I've already had two creditors resolved already. Pretty happy about that. Charlotte: And of course, our call is recorded.

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