Posted on July 30, 2009 at 2:22 am somebody told me to file bankruptcy to wipe out my debt. how does it work? it's not making sense anymore the way im just living from paycheck to paycheck and my debt doesnt seem to lessen any. sometimes i skip payments even. its just on and on.

Posted on July 30, 2009 at 2:44 am Bankruptcy can certainly help you wipe out your debt, especially Chapter 7 liquidation bankruptcy, but it's tough to qualify for that one. You first have to pass the means test. What are your debt types again? If they are mostly unsecured, or are credit card debts, you don't have to file bankruptcy because there are other debt relief solutions like credit counseling and debt settlement.

Posted on July 30, 2009 at 2:57 am I didn't really hear you say that you have been getting collection calls or that you are being sued, so I would not recommend bankruptcy just yet. I agree with peterpanamerican, try credit counseling if your debt amount is not that high but it has high interest. On the other hand, choose debt settlement if your debt amounts to $10,000 and you are past due on your payments. You said that you do skip payments, in a debt settlement program, you'd have to stop paying your creditors all together so you can save enough money to bargain with the creditors. Your balance can be cut into half, depending on the circumstances surrounding your case.

Posted on July 30, 2009 at 3:02 am You are not facing foreclosure either, are you? And since no collection calls yet, that means that you are also not yet facing a judgment lawsuit from your creditors. If you choose to hire the services of a debt settlement company, prepare to pay around $1,500 service fee. Don't worry some settlement companies would agree to paying that in installment. The advantage of enrolling in a debt settlement program is that form the time that you're enrolled with them until the end, the creditors would have to communicate with them and not you directly. The debt settlement company would then attempt to pull down your balance sometimes up to 75%--depending on who your creditors are and how much debt you owe and also the state of your finances.

Posted on July 30, 2009 at 3:58 am I see..and how would my credit be affected by debt settlement? And thank you all by the way

Posted on July 30, 2009 at 4:02 am Okay...here is a breakdown of your FICO score, take note that he longer you don't pay your creditors, the more negative its effect is on the "payment history" segment of your credit score- until your debt is settled. On the other hand, the debt being settled improves, the" amount owed" segment of your report. -35% of your credit score is determined by your payment history- 30% is by the amount owed-15% by the length of credit history-10% by new credit -and 10% by the types of credit you used

Posted on July 30, 2009 at 4:04 am Also as part of your credit report, a debt settlement would reflect on it as - “paid” or “settled.” The creditors and lenders would favor that over a bankruptcy or a foreclosure.

Posted on August 8, 2009 at 11:18 am How to wipe out my debt....a lot people are thinking that these days. Here is a list (in no particular order) of the most common approaches people take to wipe out debt: 1) Using money from savings or from selling liquid assets. 2) Getting a personal loan from a family member or friend. 3) Credit counseling. 4) Debt settlement. 5) Secured or unsecured consolidation loan. 6) Chapter 7 bankruptcy. 7) Chapter 13 bankruptcy.