Debt Elimination Program - Debt Settlement or Debt Management?

A debt elimination programs can help you to get rid of debt.These programs may include: debt settlement programs, Debt Management Plans, chapter 7 bankruptcy and chapter 13 bankruptcy. Although a debt elimination program can help a consumer to become debt-free in a short period of time, it will have negative effect on your personal FICO score.

Debt Settlement Program

Debt Settlement Program can be a great debt solution for some consumers. This type of debt solution allows a consumer to clear excessive credit card debt during a period of 12-36 months. Moreover, this debt elimination program can write-off up to 50% of the amount owed through a negotiation process with creditors. Debt Settlement Program involves offering creditors a monthly payment so a debtor will need some disposable income available to contribute towards the agreement.

Debt Management Plan

A Debt Management Plan (DMP) is a debt elimination program based around making monthly payments more affordable. During this debt elimination program excessive credit card debt is managed rather than written-off. Although DMP can take longer to clear debt, it does help in terms of affordability and preventing further contact from collection agencies.

Chapter 7 Bankruptcy

Another type of debt elimination program is Chapter 7 Bankruptcy. It doesn't require a monthly payment to be made. It allows a struggling consumer to write off excessive credit card debt fully in just 4 to 6 months. Provided that income is below the state median and the debtor doesn't have non-exempt assets (stocks and shares, luxury car etc), eligibility should not be an issue.

If you decide to pursue debt elimination on your own or through debt elimination programs, then the most important thing is your willingness to make the right decisions that start with prioritizing, organizing, coming up with a plan, and following through on your plan. So don’t waste your time, get started today!

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Bankruptcy Chapter 13

A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." (1) If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. §1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

This chapter discusses six aspects of a chapter 13 proceeding: the advantages of choosing chapter 13, the chapter 13 eligibility requirements, how a chapter 13 proceeding works, what may be included in chapter 13 repayment plan and how it is confirmed, making the plan work, and the special chapter 13 discharge.

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information: 1. A list of all creditors and the amounts and nature of their claims;
2. The source, amount, and frequency of the debtor's income;
3. A list of all of the debtor's property; and
4. A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

What is a discharge in bankruptcy?

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. Read more here - http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html.