|
Free
Consolidated Debt Solutions Quote!
- Click Here
More and
more these days, people at first sign of financial trouble consider
bankruptcy as an end-all solution to their bad credit problems. In some
circles filing for relief is considered a basic part of financial
strategy, when worse comes to worse just file and walk away. While
bankruptcy may be appropriate for some, there are other alternatives
available that can help accomplish the same goal of getting you out of
debt without taking the drastic step of declaring a chapter 7 or chapter
13.
And just what is bankruptcy?
It's a legal way for those burdened by too much debt to wipe the slate
clean or reorganize their payment schedule and start over again.
In the case of chapter 7 it's a way
to legally "stiff" your creditors and start anew. In the case
of chapter 13 it's a way to reaffirm your commitment to repay your
debts, only this time on new terms. These are the 2 most common forms of
bankruptcy used in dismissal or reaffirmation of consumer debt.
Each chapter has it's own
merits, but each comes with far reaching consequences that can affect
you for years to come. Bankruptcy may be a viable alternative for some
but before considering the drastic step of filing there are other
options available.
Chapter 7
Chapter 7 bankruptcy or
"straight bankruptcy" requires the debtor to liquidate all
non-exempt assets to pay off their creditors in order of precedence.
This form is generally used by those who lack sufficient income to cover
outstanding debts after taking care of basic necessities. This is the
most popular form because it allows the debtor to wipe the slate clean
and get a fresh start. There are however, certain obligations that are
not dischargeable, for example:
-
Alimony and child support
-
Back taxes and student loans
-
Recently made purchases for
substantial amounts
-
Property executed contracts
involving titles or liens
Before considering this drastic step
you should take an inventory of the types of debt owed. This form of
bankruptcy should be considered an option of last resort after all other
avenues have been pursued. Keep in mind bankruptcy either chapter 7 or
chapter 13 doesn't come without some long-term consequences.
Chapter 13
Those who have too much disposable
income to file chapter 7 or have assets they want to protect may want to
consider chapter 13. With chapter 13, the debtor reaffirms their
commitment to repay all or a part of their debts. This code allows the
debtor to restructure their payments and set up a new payment schedule
(usually 3-5 years) that is more manageable. This form of bankruptcy is
used when the petitioner has property they want to keep like a mortgage
that is about to be foreclosed on and other non-exempt assets that would
be liquidated under chapter 7. Filing under this code will halt all
collection and foreclosure proceedings and allow the debtor to catch up
on their payments and reinstate their original agreement.
Your payments will be made to a
Trustee who will disburse them in a manner called for in the
court-approved plan. During this time the Trustee will have control over
your finances and any credit-related matters will have to be cleared
through him.
Repercussions
Keep in mind bankruptcy
doesn't come without some trade offs. For example, filing puts the world
on notice about your personal financial affairs and your corresponding
bad credit. Since it's a civil
court proceeding it becomes a matter of public record. In some cases,
(chapter 13) even your employer can be involved because this chapter
requires deductions from you paycheck.
Bankruptcy also stays on
your credit report for up to 10 years and can hinder your ability to get
a job, establish new credit, get insurance and even a place to live.
Furthermore, you will have to pay court, filing and attorney fees up
front. You will also lose control over your finances since a Trustee
will be appointed to oversee the completion of your filing. This in
addition to the fact that filing doesn't necessarily get you out of all
your obligations, bankruptcy is not that end all solution that it's
portrayed to be.
There is one way to get
the financial relief you seek that doesn't involve the hassles of
attorneys, court appearances, creditor meetings and judges. Click on the
link below and find out what thousands before you have already
discovered. Receive a free consultation from a Consolidated
Debt specialist who understands your credit problems!
|
