Bankrupcty Explained

Although bankrupcty continues to be the most well known antidote to overwhelming credit card debt, most Americans don’t actually know that much about the Chapter 7 or Chapter 13 bankruptcy program beyond rumors and superficial knowledge, and the eventual consequences could be ruinous. In a Chapter 7 bankruptcy petition, for example, the court may well erase the borrowers’ applicable unsecured financial obligations (setting aside such items as back taxes and alimony and student loans) completely through a legal bankruptcy discharge of debt. However, in return for the bankruptcy protection, all of the property or the equivalent in cash within the borrowers’ estate that is not exempted by federal or state law will be forfeited to a court appointed trustee who in turn sells off the assets to return funds to the unsecured creditors affected through the bankruptcy.

As unpleasant as the loss of possessions could be – and, after recent changes to the United States Bankrupcty Code, most every American household filing for Chapter 7 bankruptcy protection contains something the court trustee would consider an asset – that’s not even the worst part. While most every borrower filing for bankruptcy protection is only looking for admittance to the Chapter 7 protection and eventual discharge of debts, new regulations regarding bankruptcy limits the Chapter 7 program to only those borrowers who’ve made less than the median earnings for their state of legal residence. There are ways around the new detours of the bankruptcy code, but effective navigation almost always requires the employment of a well practiced bankrupcty attorney whose up front costs shall be difficult to afford for any borrowers who’ve made so little money that they could still think about the Chapter 7 bankrupcty system.

Otherwise, the borrowers will have to endure the Chapter 13 bankrupcty plan where the trustee chosen by the bankrupcty court decides upon a monthly disposable income (the amount above and beyond your baseline household expenses as determined by the state averages for the Internal Revenue Service) which will then be pledged to the bankrupcty courts who will distribute it to the creditors for up to five years. This means, in the court approved plans that are the backbone of Chapter 13 bankrupcty, borrowers will be obliged to run not only their household budget but every life decision that could effect such through the whims of the bankrupcty trustee for approval, and hard working borrowers who’ve only been forced to seek bankrupcty protection because of unemployment or medical emergency might rightly bristle at the suggestion of enduring half a decade begging an allowance from the bankrupcty courts.

The numerous disadvantages of the bankruptcy process do not end there. Bankrupcty protection will severely damage filers’ credit ratings for up to ten years and will then remain in the court records for another decade. Chapter 7 and Chapter 13 bankrupcty programs are both enormously repulsive experiences for any borrowers unlucky enough to have need of such protection, and there’s good reason that alternatives to bankrupcty have achieved such popularity in the past few years. Debt relief plans such as settlement negotiation which manage to tremendously reduce the overall credit burdens with minimal negative repercussions to credit reports (especially compared to the carnage wrought by bankrupcty) have convinced many Americans to avoid governmental intervention altogether. Like Chapter 7 bankruptcy protection, they won’t work for every citizen, but, with free consultations just a phone call away, the research will certainly be more cost effective than anything involving bankrupcty attorneys or the federal courts.

The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.

Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?

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Bankruptcy is not your only option! Our goal is to help you determine the right course of action for you to take. We will connect you with a debt settlement company today that will help you avoid filing for bankruptcy protection.

Are your finances spiraling out of control? Get the information you need today to stop harassing creditor’s phone calls. Total Debt Relief provides a matching service to connect you with pre-screened Debt Settlement Professionals. These debt management pros will educate you on all of the options available to you to get out of debt. Total Debt Relief helps you make the most informed decision possible so that you can get your financial life back on track.