Sunday, January 24, 2010

Steps to Take Before Filing Chapter 7, Chapter 13, or Chapter 11 Bankruptcy in Tucson

Bankruptcy is a legal proceeding in which a person who cannot pay his or bills can get a fresh financial start. The first step is to stop using credit in any form. You can still use your debit cards normally but no new charges on credit cards or new personal loans. Any recent debts may considered fraudulent or an abuse. The second step to consult with an experienced bankruptcy lawyer who will guide you through this complex area of law.

Bankruptcy is a very complicated and confusing area of law. It is critical that you consult with an attorney experienced in bankruptcy before you make any mistakes that may delay and prevent your filing. Third, you need to complete a Credit Counseling Class. Within 180 days before you file chapter 13 bankruptcy in Tucson, you must receive budget and credit counseling from an approved credit counseling agency. The agency will review possible options available to you and will assist you in reviewing your budget.

Some of these agencies offered debt management plans (DMP), which is a plan to repay some or all of your debts. They organize and offer a repayment plan to your creditors. If your creditors agree, you start sending the DMP one monthly payment and they distribute payments to your creditors as agreed. If you are able to complete the program, you will have paid off all of your credit card debts.

Is a Debt Management Program a good idea? A DMP can be a good idea for some. However, counseling agencies have been known to force individuals into a DMP when bankruptcy may actually be a better option for them.

When speaking to a debt counselor you should keep the following in mind:

• Bankruptcy is not necessarily to be avoided at all costs. In many case, bankruptcy may actually be the best choice for you.

• If you agree to a debt management plan that you can’t afford, you may actually end up in bankruptcy anyway.

• Entering a DMP will be reported to credit bureaus and will also negatively affect your credit score.

• Debt management programs generally only work with credit card companies. Banks, car lenders, payday loans stores generally refuse to work with DMPs. If you have more than credit card debt then a DMP probably won’t provide much help.

It is important to note that just because an agency is “approved” for bankruptcy counseling, does not guarantee that the agency is good. Even the good agencies may not be able to help if you are already facing deep financial trouble.

Beware of any debt management program that promises that you can pay off your debts at a fraction of what you owe. Many of these programs are scams with only the intent to your money. I meet people every week who have been the victim of this type of scam. My experience is that most creditors will not consider settling for less than the total owed without a lot of pounding your head against the wall and a ton of documentation regarding your finances. Even then, they generally will deny any reduction.

For debt relief and bankruptcy help in Tucson, it is a good idea to contact an experienced bankruptcy attorney first. Unlike a credit counseling agency, a bankruptcy attorney is qualified to give you legal advice to assist you with your financial situation. They can also refer you to a legitimate debt management program if you want to explore that option.
Jeffrey Judge

Brought to you by Jeffrey Judge, an attorney that heads one of the bankruptcy law firms in Tucson. Judge Law Firm, 1647 N. Alvernon Way, Suite 1; Tucson AZ 85712; 1-866-958-4389.

Source: ArticlesBase.com

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