Options For Dealing With Excess Debts


Nobody likes to be in debt, and especially not over their heads in debt. Unfortunately, it does happen. Perhaps you lost your job and got behind while you were unemployed, perhaps you had an unexpected medical expense that wiped
out your saving, or perhaps you are dealing with the financially fallout of a divorce. Whatever the case, if you are behind, you’re probably dealing with creditor calls and feeling overwhelmed.

Luckily you do have options. You can file for bankruptcy; enroll in a financial hardship program, or try debt consolidation.


People tend to view bankruptcy in a negative light, but the truth is that it can be a real lifesaver. As a consumer, you have two options:

  • Chapter 7, also known as debt forgiveness, where all of your debts are wiped out and you start over with a clean slate; and,
  • Chapter 13, which is also known as debt repayment, is when some of your debts are wiped out and the rest are consolidated in a repayment plan.

Chapter 7 is more for individuals who have no assets, and cannot afford a repayment plan. For example, if you have been
unemployed for several months (or even years), have burned through your savings, do not have a mortgage or a car loan, and are unable to pay your debt, a Chapter 7 bankruptcy can remove the debt and give you some peace of mind. In some cases, a Chapter 7 bankruptcy can even remove debts to utility providers, possibly preventing disconnection.

Chapter 13 is for individuals who have assets, or can afford a repayment plan. For example, if you have been unemployed for a long time and you still have some money, but your debts are eating into your savings; if you have a mortgage and want to keep your home; or if you have a car payment and need to keep your vehicle, a Chapter 13 repayment plan can help you keep most of your assets. As with the Chapter 7, you might also be able to include some past-due utilities in the filing.

You can file bankruptcy on your own but, to get the results you want, you are better off using the services of a reliable Chapter 13 or Chapter 7 bankruptcy attorney.

Financial Hardship Programs

A financial hardship program is a lender-sponsored program to help customers repay their debts. In some cases, the lender may reduce your monthly fee, or your interest, for a period of months, until you can get back on your feet. In other cases, the lender may take the past-due amount, move it to the end of the loan, thereby extending the life of the loan, and create a new payment schedule. Keep in mind that not all lenders will have hardship programs.

Debt Consolidation

With debt consolidation, you essentially take out a loan to pay off all your debts, and then you pay back the loan over time. This method is easier than the hardship programs because you only have to keep track of one payment, and you can sometimes get a lower interest rate. Debt consolidation also comes in handy if your lenders don’t have hardship programs.
However, you might need to put up collateral, such as your home, to qualify for the loan. If you don’t have any assets, you might not qualify for a debt consolidation.

Ultimately, if you are having financial troubles, bankruptcy could be your best option. You don’t need to put up collateral to qualify, you won’t have to extend the life of your loan, and you won’t have to deal with interest. Additionally, although bankruptcy can last seven to ten years, many people can qualify for a loan or a credit card – to rebuild their credit – within two to three years of filing.

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.


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