Debt Management Services or If you are in dire financial straits and cannot see a way out of dealing with overwhelming , there may be a couple options to consider. Debt Management Services Bankruptcy If you are having trouble making payments The United States bankruptcy system on your , a counselor may provides a legal process for consumers be able to help you with advice or by who cannot repay their debts. Bankruptcy organizing a or “debt law has two primary purposes; to “relieve management plan” for all your debts. the honest debtor from the weight of Typically, under a oppressive indebtedness” and to protect you make a single payment to the credit the rights and of creditors in an counseling organization each month or orderly and equitable distribution of the pay period and the credit counseling debtor’s assets. organization makes monthly payments to U.S. law allows two primary ways for each of your creditors. individuals to file for bankruptcy. Under Under debt management plans, credit a Chapter 7 bankruptcy, a debtor’s non- counselors usually do not negotiate exempt assets are liquidated in order to any reduction in the amounts you repay unsecured creditors. The consumer’s owe–instead, they can lower your remaining debts are generally discharged, overall monthly payment. They do so by meaning that creditors can no longer negotiating extensions of the periods over attempt to collect the debts from the which you can repay a and by asking consumer. A debtor may be able to creditors to lower the rates and exempt certain property. For example, a waive certain fees. homestead exemption protects at least Be aware that working through a credit some equity in the debtor’s primary counseling agency can potentially have a residence. negative impact on your credit score and Under a Chapter 13 bankruptcy, debtors your ability to borrow in the future. enter into a generally three- or five-year For more information, see: repayment plan to repay a portion of their https://www.consumerfinance.gov/ask- debt. If the debtor successfully completes cfpb/what-is-credit-counseling-en-1451/ the repayment plan, the remaining non-

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09/01/20 mortgage debt is generally discharged. Before making any bankruptcy-related Individuals can keep their assets in full in a decision, you may want to consult with Chapter 13 bankruptcy case, whereas in a a qualified attorney who specializes in Chapter 7 case, individuals can only keep bankruptcy filings. Filing for bankruptcy can assets up to a certain exemption amount. have negative impacts on your credit score and your ability to borrow in the future.

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