Bankruptcy - Is It Really Your Best Option?
Are you overwhelmed with debt? Do you not answer the phone because of harrassing calls night and day? Do your children need school supplies and new clothes and shoes, and you are worried about feeding them? Will your electric be shut off soon? Are you at your wit's end? Are you feeling you don't have any where to turn?
When you are drowning in debt, the temptation could be simply to throw up your hands, run away from it all, and file bankruptcy.
Bankruptcy should be a last resort, for a number of reasons.
1. It isn't that straightforward to start over with a clean slate any more. An impactful law called the Bankruptcy Abuse Prevention And Consumer Protection Act of 2005 makes it awfully tough for individuals and couples to discharge their liabilities.
2. It forces debtors into a debt repayment plan that runs for at least five years and hardly allows clients to keep up during this period, in which the debtor must pay the overwhelming majority of their disposable revenue towards a debt plan they have little control over.
3. Bankruptcy remains on one's credit history for as much as ten years. And if an employer, mortgage or car loan company asks if you have ever announced bankruptcy, naturally you must answer truthfully.
So that means that in a lot of ways, bankruptcy remains on your record indefinitely.
4. Bankruptcy is not guaranteed to discharge your obligations.
For instance, you must still pay taxes, you still have to pay child assistance, you must still pay student loans, and there are numerous other liabilities you are required to pay.
This is not to state that you need to never consider bankruptcy under any circumstances.
You need to consult with a certified bankruptcy lawyer before you do anything, though, and be utterly fair about your situation and your prospects for revenues in the following couple of years.
You should also do online research before you even go talk to a lawyer, so you can make the final call yourself. You need to know the difference between Chapter seven bankruptcy and Chapter thirteen bankruptcy, find out exactly how long each sort of bankruptcy will remain on your credit history, and discover what sorts of debts you'll continue paying. You should get a realistic view of what your life will be like after you declare bankruptcy.
Chapter seven basically means handing over all property not exempted from insolvency cases so it can be sold off to reimburse debt. There is not any repayment agreement. It can stay on your credit report for ten years and nowadays, with the new bankruptcy laws, many folks who are not earning that much cash find that their income is too high to qualify for this option when taking the Means Test.
Chapter 13 requires a repayment plan and stays on your credit history for 10 years, though it is often removed after seven years.
Before you're making a decision that will have an effect on your life and your credit for years to come, do your research, find out whether or not it is worth filingdeclaring bankruptcy, and consider your other options, such as trying to design your own liability payoff plan - one that you have control over. Other options might include a short sale of your house, a mortgage modification, selling off assets, public assistance, and others.
