Bankruptcy: Is It Right For Me?
Bankruptcy is a great option for those who are overwhelmed with debt. However, before you file bankruptcy, you should weigh the pros and cons of filing bankruptcy and see if you have any other alternatives to filing bankruptcy. If you have older aged debts and the creditors are leaving you alone, you may want to do some research and see if you have passed the statute of limitations period of your older debts or whether you are close to the statute of limitation period. You should check your state laws and see what the statute of limitations are for older debts. Some states may be five years, while other states might be longer. Unless you have multiple judgments, it may be wise to do some due diligence on whether bankrutpcy is right for you.
Debt Settlement: Alternative To Bankruptcy
If you have re-established yourself and have consistent income and some assets, you may want to settle and negotiate with your creditors instead of filing bankruptcy. Depending on the amount of debts you have, you may want to do debt settlement where you negotiate on a percentage on the balance you owe with a creditor for the creditor to give you a zero balance letter. Many times creditors or collection agencies will settle for 20 or 30 percent on the face value of your debt and will relieve you of the whole balance and stop collection proceedings. Same with judgments. If you have an outstanding unsatisfied judgment, or judgments, see if you can negotiate with the judgment creditor about a settlement on pennies on the dollar. Tell the judgment creditor what your plans are and that you are planning on filing bankruptcy due to the unsatisfied judgments. A creditor, collection agency, and judgment creditor’s worst nightmare is a bankruptcy because a bankruptcy will wipe out all debts and any outstanding judgments so the likelihood of them settling with you are great.
Hiring A Debt Settlement Company
There are professional debt settlement companies but they will charge you somewhere between 20 to 50% of the debts they save you so they are not cheap. Whatever a debt settlement company can do for you, you can do it yourself. It is just a matter of being focused, organized, and make sure whatever payment plan or debt you settle, you go through with it and before you give any creditor or credit collector a dime, make sure you have everything in writing.
Judgments, Wage Garnishments, And Assets Seizure
If you have multiple larger judgments and the judgment creditors are not willing to negotiate in giving you a substantial face value judgment reduction, bankruptcy may be your best option. A judgment is the worst derogatory item that you can possibly have on your credit report. A judgment is like cancer. A judgment is normally good for ten years and a judgment creditor can renew your judgment for an additional 10 years once the judgment expires. You are considered judgment proof if you have little or no income and do not have any assets. A judgment cannot go after you if you have no assets, however, once a judgment creditor finds out that you are making good money and have assets, they can come out of hibernation and come after you by garnishing your wages and seizing your bank accounts and lien your property and other assets.
Not Do Anything And Let The Statute Of Limitations Run Out
The final option and another alternative to filing bankruptcy is to do absolutely nothing and let the statute of limitations run out. If you have a bunch of charge offs and unsatisfied debts that are older than 3 or more years old and your debt collectors are leaving you alone, you may want to take your chances and do absolutely nothing and let the statute of limitations run out. Depending on your state laws, most statute of limitations on unsecured debts are 5 years from the date of your last activity. Some states are 6 years. The older your debts are the harder it is for the debt collector to collect on it and the less impact it has on your credit scores. Remember that derogatory information are deleted from your credit report 7 years after the date of the last activity. Also, you do not have to pay off old unsatisfied debts or collection accounts to qualify for a residential mortgage loan. You can qualify for a residential mortgage loan with open collections, charge offs, and older late payment histories from your creditors.