Some financial experts tell people to work with a debt counseling company rather than file for chapter 13 bankruptcy, citing the fact that a bankruptcy filing can remain on your credit report for 7 to 10 years. While debt counseling may make sense in a few scenarios, here are two reasons chapter 13 bankruptcy is the better option.
Debts Will Be Discharged
One of the best reasons why filing for chapter 13 trumps using a debt counselor is that most of your bills will be discharged at the conclusion of your case if they're not paid in full.
Until the 19th century, if you owned a business that was forced into bankruptcy, you were held personally responsible for the debts. That meant that your business debts would wipe out your personal finances and even land you in prison.
After the invention of the Limited Liability Company (LLC), owners were no longer automatically at risk for losing their personal fortunes. Today, if your business is in dire financial straights, you can file bankruptcy without too much risk to your personal finances.
Payday loan stores do present a great way for some people to get cash quickly in an emergency situation, as long as the recipient has a good understanding of the fine print and how the fees and "rollovers" work. These loans are often targeted toward those who are undergoing not just a temporary financial emergency, but a financial meltdown. For those unable to make good on the check, it could mean taking out loan after loan with fees accumulating into infinity.
If you are thinking of seeking help from a bankruptcy lawyer for debt relief, one thing the lawyer will talk to you about is credit counseling. Everyone that files for bankruptcy must complete two credit counseling courses, and this is required for a reason. Here are several important things to understand about this requirement in bankruptcy.
The Timing of the Courses
The first thing to understand is that you must follow the timing requirements for these courses when filing for bankruptcy.
If you have become increasingly alarmed at the state of your financial situation, you may be considering taking the big step and declaring bankruptcy. It isn't easy dealing with the constant phone calls and letters from debt collectors when you are unable to pay your bills on time, especially after working hard at your job all day. The act of filing for bankruptcy can put an end to debt collection and more with something called the automatic stay.