Is it better to file bankruptcy or pay off debt

Can you continue with an IRS installment agreement while in Chapter 13 bankruptcy? Learn more about the zero down bankruptcy and to start your journey toward a better,…. If you are wondering how to pay off holiday debt, check out these tips —…. Can debt collectors use social media to contact you?

The short answer is yes. With such…. Homepage Get Out of Debt. Sounds easy, right? Read on. Debt settlement can only occur when you're behind on your payments. If you are currently paying off your payments successfully, the creditor has no obligation to settle when they think you should be able to pay it fully back. Sign up to join this community. The best answers are voted up and rise to the top.

Stack Overflow for Teams — Collaborate and share knowledge with a private group. Create a free Team What is Teams? Learn more. Pros and cons of filing bankruptcy or paying off debt? Ask Question. Asked 7 years, 1 month ago. Active 4 years, 3 months ago. Viewed 8k times. Improve this question. I dont know the american credit rating system, but another important point is the money itself. Say you can pay 1k per month towards your debtors which would amount to 84k over 7 years.

If you owe less than that, then paying it off is the faster and easier solution - and you played fair. If it is about that sum or a little higher, then it can be a tricky question. If you owe way more than that - bankrupcy will save you money still can have other negative side effects but that will be very location specific I guess — Flo. Lawyers who offer BK services offer a free consult. But they earn money when you file, so their advice may be biased.

Your income when above median income may push you into Ch 13 repayment plan years , and repayment is hard lookup percentage of filers who fail to complete the repayment plan. The 7 year clock doesn't start ticking until the repayment period years ends. But Ch 7 may be worse - forcing the sale of posessions you may want to keep.

Are your debt consolidation representatives lawyers or non-lawyers? If non-lawyers, I suggest getting lawyers. They usually charge less, negotiate better, and can even sue if the creditors are making harassing calls.

Hate to ask, but why do you own the home rather than renting? That's VERY premature at age 25, in my opinion, unless it was inherited. It'd be pushing the bounds, in my opinion, even if you had that projected salary.

Add a comment. Active Oldest Votes. Improve this answer. ChuckCottrill ChuckCottrill 2, 16 16 silver badges 22 22 bronze badges. Very nice, I am rereading the Dave Ramsey books I have so it will burn good finance habits into my brain, and I think the percentages for dividing income is a very handy idea.

Thanks for splitting it up like that for me, I have a lot to learn about budgeting still and this helps a lot. You cannot just decide to declare bankruptcy and make the debts go away. For chapter 7, the length it stays on the credit report is 10 years, not 7. Chapter 13 stays on your credit report for 7 years. In many cases, if you repay a debt within three months before filing longer if the debt was to a family member or close friend, the bankruptcy trustee can sue the creditor to get the money back.

If you file for bankruptcy, at the end of your case you will receive a discharge. A discharge is a court order wiping out most or all of your debts some types of debts cannot be eliminated in bankruptcy.

Many of the reasons that people want to repay debts are based on a misunderstanding of how bankruptcy works. For example, you might not automatically lose your home or car just by filing bankruptcy. Paying debts off before filing bankruptcy can lead to problems once the case is filed. Paying off a debt before filing your bankruptcy can cause problems for you and the person or business that you paid.

When you file for bankruptcy, a bankruptcy trustee will be appointed. The goal is to ensure that no one creditor has an unfair advantage over another. If that happens, the trustee can try to get the money back through a claw back action. If you have made a preferential transfer to a creditor within the 90 days before you filed for bankruptcy, the trustee can file a claw back suit and try to obtain the funds from the paid creditor.

In a claw back suit, the trustee brings a lawsuit against the creditor that you paid off in order to get the money back. A claw back suit can cause several problems with your bankruptcy.

The trustee may sue family members, employers, medical providers, and anyone else that you paid. This happens most often when a consumer pays off close friends or family members. Not all pre-bankruptcy payments will be considered to be preferential transfers. You can make payments on debts if normally make such payments.

The key is to not pay any more than you have been paying towards that debt. You can continue to pay your regular car payment, mortgage, child support, or student loans. You can also pay credit card debt that you recently incurred to purchase regular necessities of life, such as gas or food. If you want to ensure that a creditor gets paid, the best way to do this is after the bankruptcy.

There is nothing that prevents you from paying off a creditor, even if its debt has been discharged in the bankruptcy. This is best done when you want to repay friends, family members, employers, or medical providers. However, many financial institutions and credit cards may refuse your payment after a bankruptcy discharge has been entered. No one wants to file bankruptcy. But when the bills become overwhelming, it becomes the best option for some.

There are 2 kinds of bankruptcy for the average consumer: Chapter 7 and Chapter In Chapter 7, most of your debts are completely wiped out, though this is reflected on your credit report for several years. In Chapter 13, you arrange a plan with your creditors to pay pennies on the dollar for your debt over the course of 3 to 5 years, and then whatever is left is dismissed.

When you file for a Chapter 7 bankruptcy, it remains on your credit report for 10 years. With a Chapter 13, you pay it off sooner, so it only stays on your report for 7 years. This can make obtaining new credit really difficult. A few ways around this are reaffirming your car loan continuing to make payments on time can help rebuild your score. You can also get a secured card with your bank to help build credit a local credit union is usually your best bet for this.