Debt Management: Guide to managing your debt

2006-01-12

The need for debt management among the American consumers grows each day and more and more companies and organizations are offering different types of debt help and debt relief to people that require professional help with debt management. In 2003, almost 1.6 million U.S. consumers filed for bankruptcy due to credit card debts and other forms of debts. The American consumer debt is reaching unprecedented heights each year and the trend seems to be relentless. While a lot of people use their credit cards and loans wisely, there are also a large group of people in need of debt help and debt relief. Even cautious individuals that have managed their credit cards and mortgage carefully for decades can find themselves heavily in debts after a divorce, unemployment, long term illness or other types of stressful circumstances.

Regardless of whether your problem with debt management origins from credit card debts or other types of debts, you can find debt help and dept relief from unbiased guides online. When you are searching for help with debt management and credit card debt, you should be careful since there are several scam sites prying on people in need of debt help and debt relief. Be suspicious when offered quick fixes with virtually no down sides. Debt relief and debt management is usually a long process and regardless of which form of debt help you choose there will be downsides.

Things that seem to good to be true are usually too good to be true. Filing bankruptcy is sometimes marketed as the perfect solution for those in need of debt help and debt relief, e.g. due to high credit card debts. It is true that filing bankruptcy can be the only viable solution for a person, but filing bankruptcy is not a quick fix. When you use bankruptcy as a way of debt management, the bankruptcy will be noted in your Credit Report and the not will stay for at least 10 years. A bankruptcy will have an extremely negative impact on your credit worthiness and other solutions can therefore be a better choice in the long run. Once a bankruptcy is noted in your Credit Report, it will be very hard for you to obtain new credits and those credits are offered you are usually high-interest credits.

Filing Chapter 7 bankruptcy is a common way of debt management, but filing Chapter 11 bankruptcy can actually be a better solution even though it is less of a “quick fix” than the Chapter 7 bankruptcy. One of the reasons behind this is that - contrary to what some web pages offering dept help claim - a Chapter 7 bankruptcy will not remove all your debts. There are a lot of common debts that can not be eradicated by filing Chapter 7 bankruptcy. Instead, you will damage your Credit Report and still be left with the debts, which is not a very good type of debt management. A Chapter 11 bankruptcy is commonly viewed a more responsible way of debts management since you will be given help from the court to pay back at least a part of your debts. You debts will be negotiated during the Chapter 11 bankruptcy and your will pay back as much as possible over 3 to 5 years. A Chapter 11 bankruptcy will also be note on you Credit Report, but will usually not affect your credit worthiness as bad as a Chapter 7 bankruptcy since the creditors can see that you at least tried to pay back parts of your debt. A Chapter 11 bankruptcy can also include a lot of debts that are never eradicated by a Chapter 7 bankruptcy. Using Chapter 11 bankruptcy as a form of debt management is only possible if you have a regular income that is high enough to provide your creditors with a noteworthy pay back.

As mentioned above, filing bankruptcy is sometimes the best solution and can be used as a form of debt relief and debt management. Debt management that does not involve filing bankruptcy can however be a better alternative in many situations. The earlier you seek help with debts management the better, since financial problems are much easier to fix before they have been allowed to “snowball”. It might for instance still be possible for you to obtain a low interest loan to pay of high interest credit card debts. Credit card debts are usually extremely high interest debts that will rapidly grow into large amounts of money if you do not convert your credit card debts into a more beneficial type of loan.

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