Unemployment has reared its ugly head due to the recession. Many of you may be unemployed at this point in time. If that is the case, what should you do (besides look for a job and cut down expenses)? It is practical to have contingency plans, just in case your job-hunting proves unfruitful or takes longer than you would like. When unemployment strikes, it inevitably leaves you with a mountain of debt to settle. So whatever you decide, it must take into consideration the debts you have.
Essentially, you have three options – pay up what you owe, negotiate a settlement for your debts or seek bankruptcy protection. The first option is only open to you if you have enough savings or have the resources to pay off all your debts. But this is usually not the case with most people. That is why they have to take up loans in the first place. And most people service their loans out of their salaries, not their savings. So once you lose your job, you also lose the ability to service your loans.
The second option is contingent upon the willingness and cooperation of your lender. To some extent, this can be influenced by your repayment track record. If you have been faithfully servicing your loans regularly and your perfect record has been disrupted only since you lost your job, then your lender may be more sympathetic towards your case. They may accept a smaller amount as full settlement of your loan, reduce your interest rates or suspend your payments for a period of time. However, not everything is within your control, so things may not go the way you wish. Your lender may or may not grant you more reasonable payment terms.
The only option that is within your control is the third one – file for bankruptcy. You should consider this option because it is the only viable option that can potentially relieve you of all your debts in the shortest possible time. At most, it would take you 5 years. If you keep struggling to pay your debts, look for a job, cut down expenses, it may mean more than a decade of misery. Why be burdened with debts that you can find relief from through bankruptcy?
Furthermore, if you have been constantly hounded by creditors demanding payment, bankruptcy can give you immediate protection from such harassment. When you file for bankruptcy, the court grants you an immediate automatic stay on all collection efforts against you. This gives you the time to sort out your finances and go through the bankruptcy process.
There are two types of bankruptcy open to individuals – Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is where your assets are liquidated to repay your debts. In Chapter 13 bankruptcy, you are put on a payment plan where you repay your debts over a period, usually between 3 to 5 years. But to successfully file for Chapter 13 bankruptcy, you need to have a regular source of income.
If you wish to discuss bankruptcy as an option to resolve your debt woes, call us at (813) 200 4133 for a free consultation.