Whether your debt dilemma is the result of an illness, unemployment, or simply overspending, it can seem overwhelming.
The Federal Trade Commission (FTC) cautions consumers to read between the lines when faced with ads in newspapers, magazines, or even telephone directories that say: “Consolidate your bills into one monthly payment without borrowing.” “STOP credit harassment, foreclosures, repossessions, tax levies, and garnishments.” “Keep Your Property.” “Wipe out your debts! If you’re having trouble paying your bills, consider these possibilities before considering filing for bankruptcy: If none of these options is possible, bankruptcy may be the likely alternative. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Chapter 13 allows you, if you have a steady income, to keep property, such as a mortgaged house or car, that you might otherwise lose.
Debt consolidation services are not nonprofit organizations, so they charge a small monthly fee, primarily for administrative costs, to work with the debt owner.
Filing for bankruptcy also costs money, and a filing requires an attorney, who must be paid.
A bankruptcy filing stays on a credit report for up to 10 years.