How should you choose between the many debt relief options?

On Behalf of | Aug 7, 2020 | Bankruptcy |

There are two primary ways that individuals end up in debt — by living beyond their means and being confronted with unexpected bills. The latter can happen as a result of a medical emergency, job loss, divorce, death of a spouse and other non-planned events. While it would be ideal if everyone could pay their bills off, many can’t. Debtors often look for debt relief options and end up choosing bankruptcy. It’s not necessarily always the best choice for them, though.

It’s best if you’ve exhausted all of your other debt-relief options before deciding to pursue bankruptcy. You should have reached out to your creditors to see if you can work out a payment plan to pay off the bills that you owe. You also should have evaluated credit counseling service options to negotiate with your creditors and allow you to repay your debts. But these options can be costly.

You need to know how credit counselors work. They often have you deposit funds with them every month to pay both their fees and also a sum that goes toward the amount that you owe. Some non-profits charge very little. Finding one may be hard, though.

It may be tempting to qualify for a home equity line or second mortgage on your home to consolidate your debt. But there are major downsides to putting your home up as collateral in situations like this.

While many entities like the Federal Trade Commission (FTC) tell you to view bankruptcy as the last resort option, it may be the ideal option for dealing with your debt situation. While you may sell any non-exempt assets as part of the Chapter 7 bankruptcy process, you may be able to hold onto what you have by filing for Chapter 13. You generally need only to have a steady income for your bankruptcy trustee to allow you to enter into a repayment plan for your car, home and debts.

Making sense of the pros and cons of bankruptcy and other debt options can be challenging to do when you’re distressed over your uncertain financial situation. A bankruptcy attorney here in Cleveland can advise you of the many different debt relief options that you can pursue in Tennessee and help you choose which one works best for you.


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