You did not anticipate losing your job or having your insurance company deny your claim. You have always been independent and self-reliant, and you have always paid your own way. You have been slammed and brought down, but you are confident that you will recover in time.
In addition to constant phone calls from banks and finance companies, there is a basic lack of funds. There appears to be no alternative to giving up and declaring bankruptcy. That will at least get everyone off your back.
Chapter 11 will halt creditors in their tracks. It will end their calls and harassment. It will enable you to regroup and regain control of the situation. And sometimes there is no other option if a person's debts are excessive and overwhelming.
BUT Insolvency is no simple matter. Insolvency is comparable to financial bareness. You are deprived of all but the minimal necessities and forced to carry this burden in public. Bankruptcy is certainly not for the humble. Your name is placed on a public register that remains active for seven years. You are required to turn over everything of value to your creditors, with the exception of a very basic vehicle and a few tools of the trade.
In addition, you have a trustee in bankruptcy watching over your shoulder to ensure that you are passing over your excess pay and have not attempted to conceal it. The same trustee can summon you to court and question you about your assets and actions. Additionally, you must give over your passport to the trustee. Typically, the trustee will allow you to travel, but who could afford it under these circumstances? Without a doubt, you will be debt-free, but bankruptcy is three years of poverty.
There are alternatives to bankruptcy and debt relief that do not require placing your life on hold.
Debt Agreement
A Debt Agreement is an official method by which you can negotiate with your unsecured creditors. Using a government-licensed Debt Administrator who is on your side, you basically negotiate with your creditors to accept a reduced amount and suspend interest, fees, and charges. Instead of paying numerous finance companies and credit card companies, you make a single payment to the Administrator. The Administrator handles the creditors, who can no longer pursue you for your debts.
A Debt Agreement deals exclusively with unsecured obligations. If you have a car loan, you must continue making payments, but you can retain your car and home. You have more options and can save a substantial amount of money through a Debt Settlement.
Informal Understanding
Debt Agreements are limited to unsecured debts up to $107,307 and a post-tax income of less than $80,480. These amounts are indexed and increase annually by a small sum. If you exceed these limits, you cannot enter into a Debt Agreement.
Even if you are within the limits of the Debt Agreement, this may not be your best option. The majority of Debt Agreements must be finalized within four years. This reduces the availability of this option even further. The optimal debt amount for a Debt Agreement is less than $35,000. A typical Debt Agreement covers $23,000 in total obligations.
Informal agreements are debt repayment arrangements with creditors. These are significantly more flexible than Debt Agreements. There are no limitations on the quantity of debt or income, nor on the duration of any agreements. In addition, agreements with creditors are not required to be uniform.
Case Report
Michael, age 59, and his partner jointly owned a $490,000 property with a mortgage debt of over $400,000. Michael and his companion share expenses, and the family's income after tax deductions is $1,500 per week; this is sufficient to pay the mortgage but insufficient to cover his unsecured debt payments and living expenses.
Michael has amassed unsecured debts, primarily as a result of investments in his son's future. While his companion raised the children, he was the only breadwinner. Michael had six credit cards and one personal loan that was unsecured. The credit cards were all at their limit, and he could only make the minimum monthly payments. His unsecured debt amounted to $91,718 and the minimum monthly payments on his credit cards and personal loan added an additional $2,000 to his monthly mortgage payment of $2,100.
Monthly income was $6,300 and monthly debt payments were $4,100. The remaining balance was inadequate for expenses such as utilities, taxes, gasoline, and general living expenses. If they sold their residence, it would be unlikely that they could purchase another property.
Debt Negotiators' Counsel
Michael was able to maintain his credit rating thanks to a flexible Informal Agreement.
Michael was able to retain the family home and maintain his mortgage payments due to an informal agreement. The monthly payment for his unsecured debt was reduced to $980 over five years.
Informal Agreement Overview:
Reduced his monthly unsecured debt payments from $2,000 per month to a more manageable $980 per month, saving him over $1,020 per month so he could live comfortably.
There are no interest or fees associated with the unsecured debt.
3. Total contributions $58,800 as opposed to the original loan amount of $91,000, saving him over $32,200 on interest over the course of 5 years.
Michael will be free of debt in five years.
Michael's credit rating has remained unchanged.
Avoiding bankruptcy and insolvency.
This example demonstrates how informal agreements can produce significantly better results than traditional insolvency procedures.""
" - https://www.affordablecebu.com/
