Bankruptcy has been stigmatized for decades; however, it is perceived quite differently today. In the past, people who filed for bankruptcy were frowned upon as "over spenders." These days, debtors who file for bankruptcy are met with empathy, because nearly everybody knows somebody who is in financial distress.
How many people do you know that are out of work? You can probably name at least a few people who have been hit hard by the recession - whether it's your neighbor, your brother, or your friend. The numbers are sobering; everywhere you look, people are being laid off from their jobs.
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When people aren't earning enough money to keep up with their living expenses, something has to give. It's usually the unsecured debt, such as credit cards and cable bills, that go first. As the savings are depleted, people have to make important choices in their life. They have to differentiate between needs and wants.
Bankruptcy has existed for thousands of years in several corners of the globe. Chapter 7 bankruptcy in particular has afforded American's the ability to erase most unsecured debt from their record, so they can start anew. The amount of weight that is lifted off debtor's shoulders when they file bankruptcy is immeasurable to say the least. Chapter 7 bankruptcy debt relief has most certainly saved a few lives and marriages over the years.
How does Chapter 7 bankruptcy work? First of all, Chapter 7 bankruptcy is a debt liquidation bankruptcy. It is reserved for those individuals who really need it. The majority of people who file Chapter 7 bankruptcy do not have any assets, so they don't usually lose anything in the process.
What can be included in Chapter 7 bankruptcy? Debts such as credit cards, medical bills, utility bills, personal loans and certain taxes (over three years) can be included in bankruptcy. What cannot be included in a Chapter 7 would be student loans, spousal support, child support, recent taxes, court ordered fines and victim restitution.
The process from start to finish is relatively quick. A person can usually obtain a discharge within three to six months after the initial filing. Once their debts have been discharged, they can then focus on rebuilding their credit. With a good solid budget and timely payments, a person can re-establish credit within a few short years after filing for bankruptcy. In fact, for many debtors, their credit actually improves faster after a bankruptcy filing than if they never filed in the first place. Having a low debt-to-income ratio makes borrowers more attractive to lenders than if they were overburdened by debt.
As mentioned before, Chapter 7 bankruptcy is reserved for those who really need bankruptcy protection. For those debtors who want to protect a home from foreclosure or for those who have a steady source of high income they may be diverted to filing a Chapter 13 bankruptcy instead. Chapter 13 bankruptcy is considered the "debt reorganization" bankruptcy. It gets that name because people pay off all or a portion of their debts over a three to five year time period in payments that they can easily manage and afford.
If you are considering filing for bankruptcy, you are urged to contact a seasoned bankruptcy attorney who can sit down with you and go over the specifics of your unique financial situation. A bankruptcy lawyer can help you by telling you what your next best plan of action should be.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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