Washington State Bankruptcy

Filing for Washington State bankruptcy is considered the last resort when your finances are out of control. Before choosing Chapter 7 bankruptcy or Chapter 13 bankruptcy, there are a few other options you might consider. Two of the most popular and effective options are debt consolidation and consumer credit counseling. In this article, you will learn a bit about these two options to Washington State bankruptcy.

Alternative to Washington State Bankruptcy: Debt Consolidation

The type of debt consolidation that is right for you will depend upon your assets, employment and overall financial situation. The main circumstance that will determined the type of debt consolidation that is best for you is whether or not you have equity in your home.

If you have equity in your home, you might consider a secured debt consolidation loan using your home as collateral. Other options if you have home equity include taking out a second mortgage or applying for a home equity loan. A second mortgage or home equity loan may be all you need to lower your credit debt and improve your financial situation. The major drawback of using your home as equity is that if you cannot make the payments, you run the risk of losing your home. You will also want to explore Washington State bankruptcy exemptions before you consider what route is best for your financial situation.

The second type of debt consolidation loan you may consider is unsecured. In this case, a company loans you money, allowing you to pay off your debt without putting up any collateral.

Alternative to Washington State Bankruptcy: Consumer Credit Counseling

Aside from debt consolidation, another alternative to Washington State bankruptcy is consumer credit counseling. You will work with a credit counseling service to create a plan to lower or eliminate your debts. The counseling service can often make deals with your creditors to lower or reduce your payments that you would not be able to make on your own. Once the plan is in place, you will make scheduled payments to the Washington State credit counseling service and they will pay your creditors according to the predetermined plan.

In most cases, a debt consolidation will stop hounding from creditors and wage garnishments. The payment process can last two years or longer, but your time will differ depending on your situation. Your timeline will most likely be firmly established while you are creating your repayment plan with the credit counseling service. While you are paying off your debts, you cannot apply for additional credit.

The cost of working with a Washington State credit counseling service can range anywhere from nothing to a monthly fee that eventually adds up to quite a significant cost. Before entering into an agreement, you will want to do research on all credit counseling services you consider to be sure they are a reliable, trusted service. In many cases, these services are not-for-profit and receive at least partial funding from creditors.

Unlike a Chapter 7 Washington State bankruptcy, debt repayment plans do not allow you to start over with a clean slate. You are still responsbility for all your debts - both those included and not included in the repayment agreement. It is also your responsbility to keep track of all your creditors during the process to be sure that they are receiving payment from the credit counseling service as agreed. Your credit history is not erased by any agreements made during a credit counseling process, but your payments to creditors will be reported to credit bureaus. These reports may include that the account is in financial counseling, that regular payments are being made or other types of information. It is important to watch your credit reports during this time to make sure your credit counseling is reflected on outstanding and delinquent accounts.

Though a Washington State bankruptcy might be the best way for you to improve your financial situation, for some credit counseling or debt consolidation prove to be better, less extreme options. This article is provided as information only and should not be considered professional advice in any way. To make the right choices for you, be sure you do the research and speak with an attorney as necessary.