If you are faced with debts that you cannot pay due to unemployment, medical costs, or any other reason, you should know that you have options. Two possible options include consolidating your debts or filing for bankruptcy.
Because there is no one-size-fits-all solution to debt, a free consultation with the Albuquerque, NM bankruptcy lawyers at Melwani Law can help you narrow down your choices. We will provide you with sound legal advice and proactive solutions so you can make the best possible decisions regarding your financial future.
Albuquerque Debt Consolidation
Debt consolidation loans can roll your bills and loans into a single loan, theoretically making them easier for you to pay off. However, before going this route, some things you may need to take into consideration include:
- Collection activity may continue for those debts that are not paid off through the consolidation loan.
- All types of debt may not be included. For example, if you are facing foreclosure or repossession, a debt consolidation loan may not be able to help.
- Not all creditors are required to comply with the debt consolidation process. While some creditors may be willing to lower interest rates, monthly payments, and adjust the terms of your credit, not all will. Those who refuse to comply may create further complications for you.
- Penalties and late fees may not be forgiven.
- You may still lose assets, and collection activities such as wage garnishment & creditor harassment may continue.
- Your credit score may be negatively impacted.
- Any debt that is forgiven is reportable as taxable income, which may ultimately create further debt.
A Chapter 13 bankruptcy allows you to create a monthly payment plan whereby you will repay your secured and some of your unsecured debts over the course of three to five years. Some things to be aware of include:
- Collection activity, including foreclosure and repossessions, will cease at least temporarily due to the automatic stay associated with both Chapter 7 and Chapter 13 petitions.
- You may be able to keep most or even all of your assets, and debt that is discharged is not considered taxable.
- While a bankruptcy petition does have a negative impact on your credit, you will often be able to begin repairing and rebuilding it within just two years of filing.
If you are trying to decide between debt consolidation and bankruptcy, the experienced Albuquerque bankruptcy attorneys at Melwani Law can offer you a free initial consultation to help you determine which option may offer the best solution for your situation.