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Last Updated: Jul 2nd, 2008 - 21:15:22 |
(NUI) - With continued high unemployment rates, a slow economy and increasing household debt, the number of personal bankruptcies in the United States continues to rise each year. More than 800,000 Americans filed for bankruptcy in the first six months of 2003.
Bankruptcy can help consumers erase many of their financial obligations or establish a plan to repay them. It can also have a long-term negative impact on a consumer's ability to obtain credit, find a job, get insurance or rent a place to live. Certain debts, including child support, alimony and student loans, cannot be eliminated by bankruptcy, so it is important to understand what debts do and don't disappear.
To educate consumers on bankruptcy, Consumer Action, an
advocacy group for consumers, and Capital One, a major credit card company, have developed a tool to help consumers decide if filing for bankruptcy is a viable option.
"The guide, 'Your Right to a Financial Fresh Start,' helps consumers facing bankruptcy by walking them through the basics of bankruptcy and providing a checklist of questions they should be asking themselves before they consider declaring bankruptcy," said Ken McEldowney, executive director of Consumer Action.
The booklet also gives guidelines on assessing possible damage to personal credit histories so that people contemplating bankruptcy know what the procedure will do to their personal record.
* Review your credit history. Get a copy of your credit history from a credit reporting company. The reports will list most, if not all, of your debts. Look for inaccuracies and report them so they can be corrected.
* Speak with your creditors. Discuss your situation with them, and let them know you want to pay your debts. You may be able to arrange a payment plan or negotiate a reduction of your obligation.
* Consider credit counseling.
Credit counselors can help you design a budget and develop a plan to manage your budget.
* Seek out loans. If you own a home, consider refinancing or a home equity line of credit.
* Avoid companies claiming to offer the "easy way out." Many of them are for-profit counseling agencies. Investigate carefully before paying any fees.
To get a free copy of "Your Right to a Financial Fresh Start," go to www.consumer-ac tion.org/moneywise.
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