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Face your debt and take action

Many people in New Hampshire and across the country, who are struggling with debt, live life one day at a time trying to figure out what to do. You can't ignore it. With creditors calling, and the worries about wage garnishment or other threats, you're not only drowning in debt, you're drowning in stress.

If you are one of these people, you know how hard it can be to sleep when you are under this type of stress. Try taking some advice from Suzie Orman. She says you should face your debt head on and take action. Well, that sounds good, but what does it mean? Is there really a way to take action and fix the situation?

Orman was referring -- believe it or not -- to bankruptcy. If you can't pay your bills -- you can't pay your bills! It's not going to get any better by ignoring it. Your credit is probably already ruined.

In response to criticism for suggesting bankruptcy, Orman says that bankruptcy is better than "sticking your head in the sand." Creditors are not getting their money anyway unless they sue and garnish your wages or file a lien against your house. That just makes your situation worse.

If the stigma of bankruptcy has you frowning, you should know that in 2012, 1.3 million people filed for bankruptcy. Some of the increase in bankruptcy filings over the past four years is due to the recession and the unstableness in our economy. People filing for bankruptcy jumped up 32 percent in 2008 and has rose steadily until 2012.

A Chapter 7 bankruptcy allows you to keep certain properties, which are considered exempt. Other nonexempt property of worth is liquidated to settle debts. Most other debt is discharged, meaning you are released from liability for them. Creditors can no longer call you or take any collection action against you. Filing bankruptcy is a "legal" way to get back on track and relieve your worry and stress. Paying your creditors is preferable, but it is not always feasible.

Chapter 13 bankruptcy is another option for those who do not want to lose their property, but are in over their head. This bankruptcy option allows debtors to reorganize their debts into a payable plan over a period of three to five years.

Before filing for either Chapter 7 or Chapter 13, it is best to seek out advise from a financial planner or an attorney who specializes in bankruptcy. This way, you'll be aware of all your options.

Source: cnbc.com, "The good thing about bankruptcy" Sakina Spruell, Oct. 21, 2013

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