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Debt Consolidation Refinance Advice: Chapter 13 Bankruptcy versus Ch. 7 BK

Under the old bankruptcy laws, most debtors chose between a liquidation proceeding under Chapter 7 of the Bankruptcy Code and a wage-earner repayment plan under Chapter 13. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), new bankruptcy law, a two-part means (income) test now determines if your are eligible for Chapter 7 or must file under Chapter 13 for relief. And, because the new law imposes stricter requirements on lawyers, it’s harder to find an attorney to represent you in a bankruptcy case.

The new law mandates that all debtors must get credit counseling with an agency approved by the United States Trustee’s office before they can file for bankruptcy. Once the bankruptcy case is over, all debtors must attend additional counseling on budgeting and debt management before bankruptcy discharge of debts can occur.

“There are dozens of catches that will make it difficult for people who legitimately need to file for bankruptcy,” says Travis Plunkett, legislative director for the Consumer Federation of America. “The strategy of the people who supported this bill appears to be death by a thousand cuts. There are a lot of traps and gotchas designed to snare people and keep them from discharging debt that they really may need to get out from under.”

Filing for bankruptcy should always be a last resort, since it damages your credit for many years. Besides, the new bankruptcy law makes it much more expensive and time-consuming to file. Unsecured loans probably won’t provide enough money for any debt consolidation loans. So, if you are a homeowner a debt consolidation loan may provide you some relief by saving you money on interest. You may want to consider mortgage refinancing or a home equity loan (second mortgage) to pay your credit card debt and secured loans, especially if the new law for minimum payments has you considering bankruptcy.

Ideally, you should apply for a fixed mortgage rate loan due to increasing interest rates. But, if you need short-term relief and plan to refinance later on when your finances are in order or you plan on moving soon, adjustable rate mortgages may work out well for you due to their initial low interest and lower monthly payments.

Debt consolidation refinance, is it good? And What Works Best For You

Many people in our modern society live from paycheck to paycheck. Most of them do not even see where the money they earn from a month long work goes a day after the payday. A lot of them are in deep financial trouble and are already in the brink of filing for bankruptcy. Is this what you really need or do you still want to get back your good financial standing? Debt consolidation refinance may be what you need.

Let us learn a little about debt consolidation refinance. First benefit you will from debt consolidation refinance is that it may help eliminate harassment from creditor. It may also help lower payments and design an easy one monthly payment. Once you take advantage of debt consolidation, it may help avoid filing for the dreaded bankruptcy. You may get back your life and you credit worthiness.

You may need a debt consolidation refinance when you feel that your monthly obligation becomes difficult to manage. It may be able to help avoid being subject to huge and unrealistically high late payments charges and interest rates that burden you. Debt consolidation refinance is also necessary when you start to notice that even after making your monthly payments your balance still remains the same. A part from it, debt consolidation will avoid bankruptcy and keep you in good credit shape.

If you own a home, you may apply for a debt consolidation refinance against you home. Thus, you will only pay one creditor every month. You may also get a little relief and free up some cash by worrying only for payments of your newly structured consolidation debt. You may also be more diligent in paying your debt consolidation refinance when you know that you will loose the roof over your head if you miss on your payments to your debt consolidation refinance.

Finally, when in your assessment, a debt consolidation refinance is what you need; you may want to find a reputable and respectable debt consolidation company. Avoid loan sharks who will offer to help you in your debt consolidation refinance but will apply huge interest rates. They may give you stiff monthly payment terms and charge you double what other lending institution may charge for their services. This is not the debt consolidation company you want to deal with. If you can, find a non-profit debt consolidation company or lending institution that may give you the best options when you need a debt consolidation refinance. Only entrust your home to respectable and ethical lending institution to help you in the debt consolidation refinance.

Ensure you will not loose you home and will definitely keep back you credit standing. The smart choice in debt consolidation refinance may also help free up some cash and help you sleep not worrying for harassing calls from creditors.

Even when you find the non-profit lending institution for your debt consolidation refinance, you may need to scrutinize their offer. You may want to check the interest rates they recommend. Check also the length of the payment terms and the charges for their services. When you feel comfortable with the terms, only then can you sign a document sealing your agreement for a debt consolidation refinance.

It may also be a recommendation that if you have a regular eight to five job, you may ask the debt consolidation company for a little relief, may be you do not need to put your home as collateral. If they can arrange for your debt consolidations refinance without your home as collateral, maybe this is a neat deal.

Over the last decade Americans have accumulated excessive amounts of debt. Partially fueled by low interest rates and increased equity on houses due to real estate markets driving prices high up. Excessive spending and no financial responsibility often lead to bankruptcy of consumers. Now with the new bankruptcy law in place filing for bankruptcy has become much more difficult and much more expensive.

More and more people have now to look out for different alternatives. Debt consolidation programs can help consumer to get rid of the burden of excessive debt and may reduce a consumers monthly costs by hundreds of dollars each month. Debt consolidation experts can help consumers to assess their individual situation and make recommendations for how to approach the situation.

With the assistance of a debt consolidation professional, a consumer can work out a customized debt consolidation plan Depending on the severity of the situation the debt consolidation professional will contact the credit card companies of the consumer to negotiate a way out of the existing situation.

Debt consolidation is easy to get started. All it takes is a simple phone call or online inquiry. A consumer should research which companies have a good reputation as there are quite a few debt consolidation businesses out there that charge a lot of money and do not provide valuable service. They actually make things worse. A consumer also needs to be honest about the situation and willing to work with creditors. Hiding things will not help getting a consumer back on track.

While filing for bankruptcy might sound like the easier way out, this is not necessarily true. The damage to the credit score and the credit report is worse compared to working the way out of a big pile of debt. In the long run it also does not help. A change of how people think about these things has to be made. Filing for bankruptcy is pretty much somebody else paying for your debt. Credit Card companies and banks will move these losses over into charges and everyone will have to pay more to cover bankruptcy losses. The consumer also does not learn how to work with a budget and often bankruptcy filings are done twice or more by the same people. By biting the bullet and paying off debt a learning process is established that will help to gain more financial freedom in the long run.