If you struggle to make the minimum payments on your credit debt, mortgage payments and other financial obligations in New Bern, you are not the only one. Times are hard, and many people who have good jobs and decent income find themselves drowning in debt. As overwhelming as your situation may seem, there are options such as debt settlement and bankruptcy that can help you regain your footing.

Determining which option is best for your circumstances can be a challenge. Both options offer you the means to make your debts more manageable. But only one option can provide you with the financial peace of mind you seek. Take some time to review the following information about bankruptcy and debt settlement.

Examine your finances

To determine which option is best for your situation, you will need to have an accurate picture of your financial situation. Document all debts and separate them into two categories, secured and unsecured. Tally up all sources of income and document how you spend it.

Debt settlement benefits

Debt settlement allows you to negotiate with your creditors to settle your accounts for a lower amount than you currently owe. If you have noticeably more unsecured debt than you do in secured debt, and you can save up a certain amount of money every month, you may want to learn more about debt settlement.

To go the debt settlement route, you will need to contact your creditors and ask them about the programs they offer. You might want to consider third-party debt settlement companies too. Any amounts that creditors forgive usually counts as taxable income. You may have to claim the difference as income when you file taxes. Debt settlement is not an ideal option if you have a lot of secured debts. It does not cover them, or your mortgage and student loans.

Bankruptcy benefits

You have two options for bankruptcy: Chapter 7 and Chapter 13. Depending on your income, debts and other qualifying factors, you may be eligible to file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 erases certain forgivable debts. Chapter 13 restructures all your debts into a three- to five-year repayment plan. Filing for bankruptcy gives you additional protection against your creditors. It immediately forces them to stop harassing you for payment. It also forces them to work with you and not against their situation. It also allows you to keep your house and car and to catch up on your payments.

It is important for you to consider the immediate and long-term impact of bankruptcy and debt settlement and how they apply to your situation. The wrong decision can make your situation more frustrating and challenging to resolve. Many people who are dealing with too much debt find it beneficial to speak to an attorney for guidance.