Debt relief and Chapter 7 bankruptcy

When people in Minnesota are struggling under the burden of unmanageable debt, they may not know what to do in order to obtain some relief. Such debt can result from unexpected illnesses, unemployment and overspending with credit cards and lines of credit. No matter how the debt ballooned, reaching solvency can involve either negotiating with creditors or filing for bankruptcy.

Those who are dealing with high debt loads will often be targeted with advertisements from companies that promise consolidation of all payments, the ability to stop foreclosures and garnishments, the ability to wipe out all debts or to avoid tax levies. Many of these companies simply charge significant fees to the debtor without providing them any real benefit.

If people are trying to avoid bankruptcy, they should instead try to approach their creditors directly in order to negotiate a reduction in interest rate or lowered payments. Credit counseling agencies may also be able to provide some help, as they negotiate with creditors on the debtor's behalf. While taking out a second mortgage or a home equity line of credit in order to pay off debts may seem like a good idea, people should take care when doing so as their home will then be collateral for the owed debt. Often, people who take out such a credit line will find their debt ballooning again after paying it off unless significant changes are made to their financial behavior.

For some people, other ways to deal with high debt levels are simply not feasible. For people in such situations, choosing to file Chapter 7 bankruptcy may be a good idea. There are eligibility and other requirements that a bankruptcy lawyer can outline when exploring debt relief alternatives.

Source: FTC, "Debt relief or bankruptcy? ", December 04, 2014

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