Is it better to complete a debt settlement program or to file bankruptcy?
I lost my job in early September and have run into some serious financial problems. I have a part time job and I should be receiving unemployment but they denied me at first and I have to wait for a hearing to appeal that decision, and they are super backed up and I will not even find out when my hearing is for another four weeks. I took out a distribution from my 401k, went through that, and they are taking their sweet time getting another distribution sent out to me. None of my accounts have been sent to collections yet, but they are almost there. I am considering bankruptcy or using one of those companies that negotiates better interest rates with my creditors and gets them to reduce my debt by up to 40%. I want to know which route I will recover from quicker. I eventually want to buy a house, take out student loans, etc. I keep hearing that bankruptcy is not as bad as it has been made out to be, and I have heard nothing about how debt settlement programs effect your credit. Does anyone have any advice?
You don’t say much about the main issue. The root of all your problems. Being unemployed/underemployed. What’s the status of that? What did you do? What are your future prospects? And hoping for an unemployment hearing to be held and resolved will not make this problem go away. Until you have a plan for and act on gaining long term meaningful employment it is is difficult to advise if you should go into debt consolidation or bankruptcy. Instead of waiting 4 weeks for this hearing, you should be looking for a full-time job so this hearing isn’t even necessary. Once you have that job and know what you’re making and what your prospects are you will be in a much better position to make these tough decisions. Get a new job, don’t depend on unemployment.
July 16th, 2010 at 11:49 pmFiling bankruptcy goes on your credit report for 10yrs so it may stop you getting that house you want anyway sorry for job loss and I wish you the best of luck in life Take Care and Good Luck
July 16th, 2010 at 11:49 pmA debt settlement program will affect your credit rating short term.
Bankruptcy stays on your file for 10 years.
If I were a lender, I would be more skittish of the bankruptcy on your file.
July 16th, 2010 at 11:49 pmI entered into a part 9 debt agreement with a company where the govt freezes the interest on my cards and loan so i can pay a certain amt that i can afford per fortnight to that company instead who will pay it all out for me . It will take me 4yrs to pay it all off or if i can pay it off sooner, i can. In the meantime i cannot apply for loans or use the cards again. It will be on my credit file until IT’S PAID, then wiped off immediately. With bankruptcy, it will stay on your file for 7yrs i think. Debt agreement has taken a HUGE load off my shoulders. I hope this has helped. Gdlk
July 16th, 2010 at 11:49 pmUsually you should try to work out a payment program with your creditors instead of filing for bankruptcy. Since you’re not working you can only pay your debtors a little each month. Some months you probably can’t pay them anything.
You mentioned you wanted to buy a house, then get a student loan. In today’s economic environment it will be 7 or more years after bankruptcy before you’re able to get a house. If you file for bankruptcy you probably won’t get a student loan.
July 16th, 2010 at 11:49 pmTouching your 401K was a BAD idea and will possibly delay a BK filing since it is considered income. Don’t touch anything more in it’s! Retirement accounts are protected in BK.
http://www.bkforum.com can answer all your BK questions.
July 16th, 2010 at 11:49 pm