In today’s Santa Ana economy if you fall behind on your finances or barely living month to month, it is almost impossible to dig yourself out from under your hardships. This is where the Orange County bankruptcy attorneys at The Law Offices of Chen & Tran can help with your debt options.
Below we will explore different debt options and provide information as to why bankruptcy is not always the last choice.
What are my debt options?
In many cases, it is too late to attempt to repair your finances outside of bankruptcy. To do anything else would be a waste of time, effort and possible more money.
Santa Ana Credit Counseling
Credit counseling is going to a financial counselor. You will provide your income, bank statements, bills, debts etc. The counselor will provide you with a budget that you must stay on to pay off your debt in so many years. For example, the counselor can say you must pay $500 towards your debt to pay it off within 10 years. Or if you pay $1000 per month, you can pay it off in 4 years.
The credit counseling option is simply a plan to pay off your debt on your own. You will pay the counselor a fee to provide this budget and other information with regards to how interest rates may affect your payoff amount, or how you should be living your life. As you can see, this option doesn’t really pertain to the person that is barely making it each month, or the person that has already fallen behind on their debt. If you are in that position, then paying a counselor is money that you could spend on necessary items such as groceries, utility bills, diapers, school etc.
Santa Ana Debt Negotiation
Debt negotiation is what many companies will call an “alternative to bankruptcy.” Debt negotiation is where a company or law firm will attempt to debts with your creditors. In many cases, the firm can eventually settle these debts for a lower amount. HOWEVER, the drawback is that many of these companies charge large upfront fees. By the time any money even goes to the creditors, most of them already filed lawsuits, or maybe even garnishing wages. The problem is that for the first year you are making payments to the firm, much of that money is going into their pockets. Almost none of it goes to offering settlements to your creditors. This leads us to bankruptcy.
Bankruptcy is a method to discharge your unsecured debt. There are many types of bankruptcy to fit the needs of most people that cannot repay their debts. For example, there are Chapter 7 (liquidation), Chapter 13 (debt restructuring), and Chapter 11 (debt reorganization). If you follow the rules associated with bankruptcy laws, then it is almost guaranteed you will get out of debt. In many cases, people get caught up in how much equity or assets they have, or whether they qualify for one type of bankruptcy over the other.
However, the simple explanation is that if you do what the court tells you to do, you will get out of debt. In the end you will generally be left in the same position as the average person with the same size family. With your new fresh start you can move forward and rebuild your financial estate. The Orange County bankruptcy attorneys at Tran Bankruptcy Law will provide you will all the information necessary so that you can make an informed decision.