Filing for bankruptcy is not necessarily the best solution to one’s debt problems. Here are some alternatives to consider research to see if there is another course of action that makes more sense for your particulars. Federal and dwelling debt collections laws provide debtors with protection from harassment and abuse. The Federal Stunning Debt Collection Practices Act outlines how to deal with collections agencies. A complaint can be filed with the Federal Trade Commission against agencies.

Negotiate! Most creditors would rather secure some money than no money. Often they will be willing to settle for a lesser amount than what’s owed. Seek help from a non-profit debt counseling credit or agency to negotiate payment plans and work with you to improve your financial situation. But remember they receive their money from the creditors.

Consider that working with a debt counseling agency is a lot like filing for Chapter 13 bankruptcy with one well-known difference. When a debtor misses a payment under Chapter 13, they are protected from collections activities. In Chapter 13 bankruptcy, the repayment concept may be for a portion of, not the entire debt, unlike the pay-the-full-debt-back programs of credit-counseling agencies.

Bankruptcy Means Test: How Obscene is Your Income?

With the passing of revised bankruptcy laws, a modern “means test” was included providing a formula designed to prevent filers with higher incomes from filing for Chapter 7 bankruptcy. One does not have to be without an income to qualify for Chapter 7. The test was designed to filter out the people who truly can afford to repay their debts and confirm the ones who can’t.

First determine if your income is greater or lesser than the median income of your state. If it’s less than the median – you’re in! No need to continue. Go ahead and file for Chapter 7 if you like. There is an online calculator that takes the guesswork out of this increasingly complex formula. Go to www.legalconsumer.com. It’s free and requires no registration. If you pass the means test you qualify to file for Chapter 7 bankruptcy. However, it doesn’t mean you’re obliged to file Chapter 7.

f you don’t pass the means test, you may only qualify to file for Chapter 13 bankruptcy. This will require making a debt re-payment plan over a 3 to 5 year period as monitored by the court.