No matter the situation, bankruptcy is a highly personal
decision which can have both good and bad consequences. In fact, for some
people it can be an unfortunate but very necessary choice. One thing we
at Credit Card Debt Consolidators always stress, however, is that our
clients understand all of these consequences, as well as the wide array
of alternatives to bankruptcy.
Bankruptcy may indeed be a valid option for you if you are nearing retirement,
have more than four dependents, have an extremely large secured debt load
and a small savings level. Depending on your situation, however, these
factors do not automatically necessitate bankruptcy.
Before you make a decision, please contact us.
The following is a primer on bankruptcy laws. Understand that the following
passages are not offered as legal advice and should not be considered
as a alternative to legal counsel.
Chapter 7 Bankruptcy: Important Details to Understand
Once Chapter 7 Bankruptcy is initiated, your assets (minus some exemptions)
are liquidated, with the proceeds used to pay your creditors. Certain
creditors have precedence over others, of course, and this is outlined
in the bankruptcy code.
Generally, Chapter 7 has the quickest effect and is often the simplest
to understand. This is one of the reasons why it is the most popular form
of bankruptcy in America today. However, it is never a cure-all. Despite
the damage it inflicts to a credit rating, it also cannot alleviate child
support, student loans, court fines and some others.
Under Chapter 7, a full disclosure of your personal financial information
is necessary. Some examples of information that must be declared are income,
property and assets, liabilities, exempt assets, and all property transactions
over the previous two years. Needless to say, if you value your personal
privacy, Chapter 7 is definitely not the best vehicle for you.
Chapter 13 Bankruptcy: Important Details
Chapter 13 Bankruptcy is a entirely different beast than Chapter 7, wherein
assets are not court liquidated. Instead, a repayment plan is negotiated
between the debtor and creditors, to which the court binds both parties.
In exchange, the debtor can retain all (or most) property as long as regular
payments are made to a trustee over the life of the plan.
A Chapter 13 filing is basically a commitment to paying off your creditors
over three to five years. Debts are renegotiated, so that often settlements
are much lower than before filing. But, an important fact to note is that
this form of bankruptcy may stay on your credit report for up to 10 years
after your last payment. Obviously, this can have dire effects on applications
for credit - which may include buying a home or financing a business.
Another unfortunate consequence of both Chapter 7 and 13 bankruptcy is
that it may also reported to insurers and employers for the rest of your
life. Which makes it an extremely long-term decision, despite the fact
that it appears, on the surface, to be short-term.
Debt Consolidation Vs. Bankruptcy
Most Americans do not understand that debts can in fact be consolidated
without ever needing to file for bankruptcy. In fact, debt consolidation
programs like ours use similar techniques and offer similar results as
Chapter 13 bankruptcy - except without the harsh credit consequences that
such a bankruptcy creates. Our goal is to save our clients from bankruptcy,
and to preserve - or better - their credit report results.
With Credit Card Debt Consolidation, most clients obtain debt freedom
within two to four years, and sometimes less. Total debt savings can be
anywhere from 50% - 75%, and no legal fees are charged. Most importantly,
your credit standing is often improved because you acted in good faith
towards your creditors, instead of filing for bankruptcy.
The effects of avoiding a bankruptcy are truly worthwhile, especially
if you have hopes of buying a home, car or property over the next 10-15
years. These are just some of the benefits of debt consolidation.
We recommend you contact us to find out if our
program can work for you.