2 Forms of Debt Relief You Don’t Want to Hear

When you think of debt relief you think about consolidation, settlement and restructuring. These are all good drp options to consider when you have debt problems, but there are two other options you can consider. Read further to see what they are.

The above are useful choices in many instances, but there are some cases that you will need even more protection because your debt is beyond negotiation. These options are chapter 7 and chapter 13. If these are not familiar to you these are the two choices the law allows an individual to file in bankruptcy court.

The main difference is who qualifies. Each state has a median income limit for each family size. If you are under the limit for your state you can file either chapter, if you are over the limit you can only file chapter 13. Chapter 7 allows you to discharge all debt (few exceptions) which usually takes a few months after you file. When finished all your debt is gone, you are debt free. Of course there are credit repercussions for the next 10 years. Chapter 13 is a repayment plan set by the courts for the next 4 to 5 years. After that whatever is outstanding is discharged, you are debt free.

There is one other factor you get with this form of debt relief. This is called Automatic Stay. Legally when you are under the protection of the courts the lenders and collectors cannot harass you or file any liens against you. We say legally because they may still try to collect from you, but now you know your rights and you legally can stop them. If they don’t you can sue them.

Credit card debt is one of the major problems most Americans face today, along with housing mortgages and unemployment. Majority of Americans owe so much that it is quite hard for them to recover financially without the benefit of monetary aid, whether from private financing sectors or some debt elimination grants from the US government.

Since Barack Obama took the presidency, there have been talks of financing programs and debt relief grants from the government specifically designed to quell and eventually eliminate the debt problems of the American people. The Obama Debt Relief Act, also known as the Making Homes Affordable act, has created a lot of buzz, especially among people who have huge debts to their name and the players of the financing industry.

But is this Relief Act just another program from the government meant to give people false hopes? Or is it the best solution ever formulated to counter the rising debt incurred by many Americans?

The truth is that it is supposed to take effect on February 22, 2010. This act is basically designed to address the growing debt crisis in the United States and its approach includes not only credit cards, but housing loans and mortgages as well.

It is more than just a debt elimination grant from the government; the Debt Act mandates that creditors and other finance-lending agencies are not to charge their clients with penalty fees unless is they ask for an over-limit fee. Banks are also instructed not to include late fees in their clients’ statements if the banks are late in crediting payments.

The Obama Debt Relief Act also tackles debt issues that stem from housing loans and mortgages. The act enables qualified homeowners to refinance and/or restructure their loans and even their terms of contract to make it easier for them to pay their mortgages. Not only does this aid from the Obama Administration helps people to decrease their debts, but also saves their houses from foreclosures as well.

There are also other options available for people who are in debt and who do not qualify for a government debt relief. People who are in deep credit card debt can avail of debt settlement instead. Debt settlement programs are mostly offered by private settlement agencies and are designed to eliminate debt as much as to 70%.

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