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Bankruptcy

Alternatives to Bankruptcy in Illinois

July 25, 2014 by illinois

Consolidation of Debt as an Alternative to Bankruptcy in Illinois

Before you break down and decide to file for bankruptcy, you should look into and research some other alternatives to bankruptcy in Illinois. How useful these alternatives to bankruptcy in Illinois are and whether or not they are available for you depends upon the state of your employment and what assets you possess and the types of assets they are. The other alternatives to bankruptcy in Illinois will involve the consolidation of your payments into a debt consolidation loan or the consolidation of your payments through a type of service for credit counseling.

There are two kinds of loans for consolidation of debt.

  • One is secured by equity contained in your home.
  • One is not secured by equity contained in your home.

When you use acquire a loan for debt consolidation that is not secured using your home, the company basically loans you money and you use this money to pay off your debt. You simply make a payment each month to the company of consolidation and they use this money to handle the debt to your creditors.

This kind of loan may also enable you to lower the cost of credit and improve your circumstances financially by consolidating the debt you have through an equity line of credit on your home or a second mortgage on your home. You should think extremely carefully before you do this. This specific loan puts your home up as collateral meaning you could lose it if you fail to make your payments or if they are late.

This is extremely important to consider if you have more equity invested in your home than you can protect under the home exemption of Illinois. If you have more than you can protect, then you will have to create a payment plan under a Chapter Thirteen bankruptcy in order to keep your home or surrender it under a Chapter Seven bankruptcy. The debt consolidation as an alternative to bankruptcy in Illinois is probably better for you to look into if you are considering a Chapter Thirteen bankruptcy in order to be able to keep your home.

Consumer Credit Counseling as an Alternative to Bankruptcy in Illinois

Another alternative to bankruptcy in Illinois is consumer credit counseling. Under a plan such as this, your creditors may accept a reduction in payments and lower your interest rates. As a general rule, you make a deposit to the credit counseling service each month and the service uses this money to pay your creditors using a schedule that was created by your counselor. Sometimes, you will have to agree to not use any more credit or apply for any more credit while you are a participant in a program such as this.

If you want your plan to be successful, you must make your payments regularly and in a timely manner. It could take up to two years or even longer to complete. You can ask the credit counseling service for an estimate on how long it will take to complete your particular plan. Some services for credit counseling charge little or nothing for management of the plan while others may charge a monthly fee that could potentially add up to a significant sum given enough time. Contributions from creditors are what fund some services of credit counseling.

A plan for repayment of debt can eliminate much stress when it comes to dealing with overdue bills and creditors that seem to continually harass you. This does not mean that you can forget about all of your debt. The plan does not serve as an eraser nor does it provide for a fresh start as a Chapter Seven bankruptcy might. You yourself are still responsible for the paying of any debts that are not included within the plan and for reviewing your monthly statements to be certain that the creditors are receiving your payments when they are supposed to. You have to make sure that the creditor has lowered your interest rates or finance charges or waived any late fees if these were concessions included within your plan for repayment.

Unfortunately, a plan for repayment of debt will not erase your bad history of credit. Under the Fair Credit Reporting Act, accounts with accurate information can stay on your credit report for anywhere up to seven years while a bankruptcy will stay on your credit report for ten years. In addition to this, creditors continue to report information on any accounts handled through the repayment of debt plan.  In example, a creditor may report that an account has had payments that have been missed completely or that are late or that the account is going through financial counseling. It may also report that there are concessions such as write-offs or lowering of interest rates, cancellations of late fees and such.

Filed Under: debt relief Tagged With: Alternatives to Bankruptcy in Illinois, Bankruptcy, Bankruptcy in Illinois, Benefits of Illinois Debt Consolidation

Ways to Solve Your Debt Problems

September 26, 2013 by illinois

Debt Problems

The most prevalent trouble that people are involved in is called debt. Your debt problems can cause many problems with a relationship as well as both physically, emotionally. There are many times that people don’t even realize there are options to help overcome your debt problems.

Ways to Reduce Debt Problems

There are many ways that people will talk about reducing their debt problems. However there are a few well known options that can offer the most success. There are companies designed to help you through you debt problems. These debt management companies offer several options such as

  • Debt Settlement
  • Debt Consolidation
  • Renegotiation
  • Bankruptcy

Each person must decide for themselves which program that can help their debt problems the most. Using a debt management company can offer benefits that you could benefit from. A credit counselor can help you assess your debt as well as help you to find a solution that fits your budget. They can help through creating a budget to help you learn what you can afford. They are able to negotiate on your behalf to the creditors to help a person reduce their total debt. This can decrease your required monthly payments. Several of the options involve a counselor taking your payment made to them and dispersing it to your creditors based on an agreement.

Debt Settlement

A debt settlement is one of ways to end your debt problems. A debt settlement is when you use a third party to negotiate with your creditors. The third party can help to reduce your debt and can offer settlement options based on what’s best for your budget. When it comes to debt settlement your creditors can pick one or two options. First they can either compromise on a settlement which will be less than what they wanted. The alternative is to lose the entire debt, this happens when a person has been unable to fix their credit and they file for bankruptcy. For this reason you creditor are able to work with your debt management counselor to reduce your debts up to 50% sometimes. This is one way to ensure that your debt problems don’t hurt your credit any further. This is one of the fastest ways to become debt free.

Debt Consolidation/ Debt Consolidation Loans

Debt consolidation programs are another way for someone to deal with their debt problems. This form of debt management can also be handled by a management company. This is different than a debt settlement. Debt consolidation is designed to reduce payments or payoffs. The debt management counselor will also act as your negotiator in this situation. After principals, interest, and fees have been lowered the counselor will act as the in between. An account is set up for you to place your monthly payment into and the debt consolidation company will then disperse the payment amongst your creditors.

A debt consolidation loan is very similar to participating in a consolidation program and can help with your debt problems. The debt management company will help you to reduce the debt you owe your creditors. Rather than having an account and letting them disperse the money, you obtain a loan that’s used to pay off the negotiated debt amounts. This will combine all of your debts into one payment, by leaving you with one debt. This loan can be lower interest than any of your current debts. Another positive to gaining a consolidation loan is that there are no negative effects to your credit.

There are some drawbacks to working with a debt consolidation company, and the Federal Trade Commission suggests against it. There have been cases where the management company has not made the payments on your behalf, or paid considerable fees that weren’t necessary. Remember that you should always be cautious and research the company that you choose to use to help you with your debt problems.

Renegotiating

When looking into renegotiating with you creditors to help reduce your debt problems it is important to have a goal in mind. The purpose of renegotiation is to reduce your interest rates to a very low number compared to your current interest rates. These interest rates can commonly be the main cause to your ever increasing debt problems. It can be troublesome to try and negotiate on your own, however it can be done. New terms and even new policies can be implemented in order to allow you to make your payments on time.

Bankruptcy

This option someone thinks about only if all other avenues have been exhausted. Fixing debt problems with bankruptcy can cause you to have a lot of negative repercussions. You will have bad credit for 7 to 10 years with little to no chance of recovery.

Be sure that the option that you choose is the one best suited for your debt problems.

Filed Under: debt consolidation, debt relief, personal finance tips Tagged With: Bankruptcy, debt consolidation, debt consolidation loan, debt problems, Debt Settlement, Solve Debt Problems

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