Pros of debt settlement

• Alternative to bankruptcy: Debt settlement is particularly appealing to people who are at the verge of filing bankruptcy to avoid their debt liability.
• Reduces debt amount: It can help you in satisfying your debt for far less than what you have owed originally. You may successfully save between 50 percent and 60 percent on each account.
• Become debt free: You can free yourself from your debt obligation within a period of 24 to 36 months.
• Help in rebuilding credit: Once you successfully settle your account, you can start rebuilding your credit.
• Settle all unsecured bills: You can settle all your unsecured bills through settlement.
• No further liability: Once the debt is settled, the debtor is free from all future liability of making payments toward it.
• Help you save: Because you can lower the debt amount, you can save money through settlement.

Cons of the process

Debt settlement isn’t free from negatives, and debtors contemplating settlement should be aware of its cons in order to make an informed decision.

• Put a dent on your report: The process of settlement is likely to put a dent on your credit report because you can’t negotiate a settlement with the creditor until you default on the account.
• Negative marks would continue: Even if you have settled the account, the negative marks would continue on your credit report.
• Limitation to unsecured loans: Settlement doesn’t work for secured loans. Hence, you can’t settle your mortgage or auto loan. Also, settlement isn’t an option for student loans.
• Incur tax liability: Though settlement would reduce your debt burden, you may incur tax liability on the forgiven amount of debt.

Whether you should consider settlement depends upon your situation. If your debt situation has become extremely unwieldy so that you can no longer manage it, debt settlement can possibly be your solution.

Are your bills looking like this? Debt consolidation might be for you!

If you are finding it difficult to manage multiple bill payments on time, you may consider consolidating your bills. You can enroll in a bill consolidation program offered by the various debt relief/consolidation companies or apply for a debt consolidation loan. Before enrolling in the program, you must gather sufficient knowledge about the way it works.

What is a debt consolidation program?

A debt consolidation program helps you consolidate all your unsecured bills including your medical bills, student loans, utility loans, store cards and unsecured credit card bills. You can replace all your higher interest bills with a single bill at low interest by enrolling in a consolidation program.

How does debt consolidation program work?

A debt consolidation program helps you tackle your debts and pay your creditors on time. It works in the following way:

• Assess your financial situation: A representative of the consolidation company analyzes or assesses your financial situation.
• Negotiate with creditors: The company representative communicates with your creditors on your behalf and negotiates with them to reduce the rate of interest on your bills. The company may also help you waive off late fees. The consolidation company designs a repayment plan for you based on your credit needs and gets it approved from your creditors.
• Single payment to the consolidation company: As soon as your creditors approve the repayment plan, you have to start paying a single lower monthly payment to the consolidation company and they will disburse the payment on time among all your creditors.

You can also consolidate your bills without taking professional help by applying for a debt consolidation loan. Consolidation loans are personal loans that assist you to pay off your debts. It helps you replace all your bill payments with a single lower monthly payment that you must pay towards the new loan. You can also consolidate your payday loans by obtaining a consolidation loan.

From retailers to chemical companies to newspapers to casinos to racetracks — corporate bankruptcies are the order of the day. According to the Ottawa Citizen, US bankruptcy filings by large companies in the first quarter of 2009 were 78 per cent higher than the same period in 2008 and three times higher than in 2007. Here are a few recent and noteworthy bankruptcy filings.

Cable

March 27, 2009, Southern District of New York. St. Louis-based Charter Communications, the nation’s fourth-largest cable operator. The company, controlled by Microsoft co-founder Paul Allen hopes to reduce its debt by $8 billion and intends to operate and serve its subscribers as usual.

Sporting Goods

March 21, 2009, District of Delaware. Sportsman’s Warehouse, a Utah-based sporting goods retailer with more than 60 stores. The company intends to continue to operate 29 stores.

Resorts

March 19, 2009, Eastern District of Virginia. Greenbrier Hotel Corp, a unit of the transportation company CSX Corp and owner of the posh four-star Greenbrier resort, which has housed numerous presidents and royalty in West Virginia. The company lost its five-star rating in 2000 and since then has spent millions to expand its offerings and attract younger visitors.

Aerospace Parts

March 18, 2009, District of Delaware. Fairchild Corp, a Virginia-based company whose businesses include aerospace parts distribution, commercial real estate, and apparel for motorcycle enthusiasts. Fairchild intends to continue to do business while it reorganizes.

Chemicals

March 18, 2009, Southern District of New York. Chemtura, specialty chemical maker in Connecticut. The company and its US operations filed for bankruptcy protection after a recent drop in orders, joining LynondellBasell Industries and Tronox to become the third major chemical firm to file since January.

Newpapers

March 13, 2009, District of Delaware. Sun-Times Media Group, the Chicago-based parent company of The Chicago-Sun Times and operator of 59 newspapers. The company has no bank debt but owes $608 million in back taxes and penalties.

Racetracks

March 5, 2009, District of Delaware. Magna Entertainment, one of the largest horse racetrack operators in the US and owner of Laurel Race Tracks, Remington Park, and Pimlico racetrack which hosts the Preakness race, and Santa Anita Park in Southern California. Magna’s prepetition debt and negative cash flow require it to sell off assets. Internet entrepreneur and Thoroughbred owner Halsey Minor is prepared to make an offer to reorganize the company.

Holiday Ramblers

March 5, 2009, District of Delaware. Oregon-based RV maker Monaco Coach, whose products include Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names. Despite a litany of cost-cutting measures, the company– along with rest the RV industry — has been decimated by weak consumer confidence, tight credit markets, and a summer season in which gas prices spiked to record highs.

More Newspapers

February 22, 2009, Eastern District of Pennsylvania. Philadelphia Newspapers, parent company of two major newspapers, the Philadelphia Inquirer and Philadelphia Daily News. The same conditions that have devastated the broadcast industry — advertising downturn, rising newsprint costs, and the migration of readers to the Internet — caused the company to default on loans last year. The company intends to continue operations while seeking concession from lenders, although negotiations have been markedly combative.

Casinos

February 17, 2009, District of New Jersey. Donald Trump’s casino group Trump Entertainment Resorts, owner and operator of several Atlantic City casino hotels, including the Trump Taj Mahal, Trump Plaza and Trump Marina. The company filed just days after founder Donald Trump quit the board, saying he disagreed with bondholder’s decisions, including their rejection of his buyout offer. The bankruptcy was filed before bond holders could present an involuntary petition. This is the company’s third bankruptcy filing.

Video Games

February 12, 2009, District of Delaware. Midway Games (and nine of its affiliates), the Chicago-based developer and manufacturer of home video game entertainment products. Best known for the “Mortal Kombat” games, Midway’s legacy also includes landmark titles such as Ms. Pac-Man, Spy Hunter, Tron, the Rush series, and NBA Jam.

Batteries, Shavers, Pet Care

February 3, 2009, Western District of Texas. Atlanta-based Spectrum Brands, the maker of Rayovac batteries, Remington shavers, Spectracide lawn-care products, Cutter insect repellent, and Nature’s Miracle pet care products. The company was delisted from the New York Stock Exchange in January and its stock currently trades for just over a penny per share.

The President’s Clothes

January 23, 2009, Northern District of Illinois. Chicago-based clothier Hartmarx, the largest maker of men’s tailored clothing in the U.S. The company’s clients include President Obama, who wore Hartmarx creations at the Democratic National Convention in Denver, on election night in Chicago, and at his inauguration.

Newspapers (one more time)

January 15, 2009, Southern District of New York. Minnesota’s largest newspaper, the Star Tribune, which was purchased by a private equity group just two years ago. The Star Tribune is the 10th-largest Sunday newspaper in the U.S. and the 15th-largest based on daily circulation.

Restaurants

January 15, 2009, District of Delaware. ARG Enterprises, owner of the Black Angus Steakhouse restaurants. The company is just one in a long string of bankruptcy filings by sit-down restaurants hard hit by the deepening recession.

Department Stores

January 14, 2009, District of Delaware. Gottschalks, a Fresno-based retailer with department and specialty clothing stores in California, Washington, Alaska, Oregon, Nevada, and Idaho. The 58-store chain is in the process of liquidating and closing its doors.

Technology

January 14, 2009, District of Delaware. Technology giant Nortel Networks, one of Canada’s largest companies. The company is under contract to supply the 2012 London Olympics site with equipment for internet access, call centers, and fixed phones. Nortel is the first major technology company to file bankruptcy in the current global economic crisis.

Fuels

January 6, 2009, Southern District of New York. US operations of Netherlands-based chemical giant LyondellBasell Industries. The Company has nine manufacturing facilities located in the Houston area and its products range from fuels to chemicals and plastics.

Crystal

January 5, 2009, London. British luxury crystal and ceramic maker Waterford Wedgwood. In late March the company was bought out of receivership by KPS Capital, a New York-based private equity firm. KPS plans to move some manufacturing jobs from the United Kingdom to Indonesia. As a result of the bankruptcy, Waterford will leave behind debts of $1 billion.

Electronics

November 10, 2008, Eastern District of Virginia. Circuit City, the country’s second largest retailer of consumer electronics. After failing to find a buyer to liquidate its holdings, the company closed all of its 700-odd stores in early March.

The last resort

You can’t make your mortgage payment. Or you’ve lost your job and are faced with a mountain of credit card debt. Either way, you’re a casualty in the nation’s economic avalanche and you find yourself contemplating the last resort — bankruptcy. Bankruptcy is a choice more and more Americans are willing to make these days. Bankruptcy filings peaked in 2005, when more than 2 million American individuals and businesses rushed to file before a more creditor-oriented law went into effect, according to AACER, a bankruptcy data firm. Filings fell considerably in 2006 and 2007, but in 2008 climbed back up to 1.1 million.

The larger economic picture

The vast majority of filings are personal bankruptcies. The swelling tide of foreclosures is taking its toll. People are struggling in today’s economy, and it’s showing up in the bankruptcy courts. According to AACER, in February of this year, bankruptcies took their biggest year-over-year jump – 37 percent – since the bankruptcy law changed in 2005.

Coming soon to a debtor near you

Bankruptcy can offer a fresh financial start, although it will remain on your credit record for up to ten years, which may make it impossible to obtain competitive interest rates on loans. Many people, however, already have poor credit records when they file and have nowhere to go but up. So, how do you know when it’s time to file? There are no hard and fast formulas, but here are some common indicators:

• You are dipping into your retirement savings regularly.

• Your wages are being garnished by creditors.

• You have large credit card debts and are able to make only the minimum payments.

• Your house is in foreclosure proceedings.

A little something for everyone

Home ownership status and income level are some of the factors in determining whether you file a Chapter 7 bankruptcy or a Chapter 13. Under Chapter 7, many if not all of your debts can be canceled, with exceptions including unpaid child support, student loans, and some kinds of taxes. If you have regular income in excess of a certain amount, you may have to file under Chapter 13, which involves paying back some or all of your debts over a three- to five-year period.

Chapter 13 can be the preferred route if you want avoid a foreclosure, and if you have significant equity in your home or car. In a Chapter 7 case, you remain at risk of foreclosure if you can’t bring your past-due mortgage payments current. In Chapter 13, you can pay your mortgage arrearages over three to five years.

Also, Chapter 13 allows you to keep some kinds of non-exempt property that you would have to give up under Chapter 7, including equity in your home and car. But many people who file under Chapter 13 fail to complete their debt repayment plans and end up converting to Chapter 7, sometimes losing the houses and cars they were trying to keep.

These are tough financial times. You may be facing insurmountable debt, the very real danger of losing a home or car, and continual harassment from creditors and debt collectors. Your struggles may be compounded by divorce, the loss of a job, uninsured medical expenses, or a combination of other unexpected stresses. You know you need to do something — and soon — but what? As financial pressure mounts, various options can start to seem more and more confusing.

Let Us Help.

At Local Bankruptcy Attorneys, our goal is to help you get clear about debt-relief options. We want to make it easier for you to decide what to do and help you get started on your way to a debt-free future. In many situations bankruptcy can wipe the slate clean fairly quickly, and provide the fresh financial start you need. But depending on your particular situation, there may be other effective options.

The Information You Need Is Right Here.

Take a few minutes to learn a little more about bankruptcy. If you’re considering bankruptcy, we know you have questions and we want to help you find answers. Join our Live Chat group; take a look at the answers to some frequently-asked questions about bankruptcy; browse through our library of helpful resources. If the answer to just one persistent question about bankruptcy or other debt relief would help you get clear, we’ll provide the answer for free from an experienced bankruptcy attorney.

Protect Yourself with Professional Legal Advice.

Debt relief in general — and bankruptcy in particular — involve complicated legal issues with far-reaching and long-lasting consequences. Professional advice is vital to getting you out from under unmanageable debt once and for all. We understand how difficult it can be — both emotionally and financially — to get the advice you need when you’re struggling just to make ends meet. So before you do anything else, take us up on our offer to provide a Free 30-Minute Consultationwith an experienced and reputable bankruptcy attorney in your area. Personalized legal advice is exactly what you need to get your debts back under control and protect your financial future.