Going Bankrupt

Whenever the debt loads of American families threaten to truly overwhelm the household budget, going bankrupt has been the instinctual response for generations of hard working men and women residing in the United States, and, to be sure, going bankrupt may still seem thoroughly reasonably to a certain percentage of consumers (the poorest and the richest) with very specific circumstances. Unfortunately, going bankrupt in the years after the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act isn’t quite as straightforward as it once was. Governmental assistance in the form of Chapter 7 and Chapter 13 bankruptcy is not just more difficult to achieve under the current system, even those borrowers who’ve managed to convince the court mandated trustee beholden to an utterly mutated United States Bankruptcy Code that going bankrupt would be the best scenario for their family and their country may not actually want to enter such protection once they understand all of the new inevitabilities.

Traditionally, in the eyes of the law, going bankrupt has been the last bastion of protection for American borrowers of all classes – whether we’re talking about over extended entrepreneurs or desperately poor families suffocating in debt – who need to get their affairs in orders, and the overwhelming majority of bankruptcy cases have been filed with the borrowers hoping for the Chapter 7 debt elimination program. However, successfully going bankrupt after the passage of BAPCPA has less to do with a demonstration of the consumers’ needs than how much the prospective bankruptcy filers have earned relative to their state of residence. This thoroughly arbitrary designation has next to nothing to do with the need of the consumers going bankrupt, but, as the legislation was intended to do, the changes to the bankruptcy code have been extremely effective in preventing borrowers from eliminating their debt through bankruptcy protection.

For those borrowers going bankrupt who find that they won’t qualify for Chapter 7 protection, there is still the Chapter 13 plan. Especially for those borrowers facing foreclosure, going bankrupt through the Chapter 13 reorganization program – which should create a more advantageous payment situation – could prove a saving grace, and home owners genuinely concerned about losing their residence may well be able to incorporate past delinquencies into a five years repayment schedule. However, aside from those consumers that believe restoring their mortgage to be of crucial importance above all else, few Americans going bankrupt would want to pay the money (administrative charges owed to the borrower’s local county clerk plus the increasingly necessary lawyers who specialize in bankruptcy) and damage their credit merely to allow a bankruptcy court trustee to propose a household budget.

While bankruptcy has tragically let down most consumers that needed governmental help, Chapter 7 or Chapter 13 protection is not the only option available for consumers who worry that going bankrupt would be the most effective solution to their outstanding debts. Indeed, going bankrupt will cause long-term damage to FICO scores and credit ratings that would preferably be avoided by most borrowers who wish to some day again take advantage of credit opportunities. Debt management strategies such as the settlement negotiation initiative employ the persistent threat of Chapter 7 debt elimination programs to demonstrably cut down credit card bills and similar high interest obligations, but, by only implying their borrower clients’ plans for going bankrupt, they manage to force the lenders’ hand with debt reduction absent the credit ruination and property seizure that going bankruptcy in the twenty first century unfortunately foists upon most current filers.

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?

Avoid Bankruptcy

Debt Relief

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.