Filing chapter 7 bankruptcy is a way of clearing serious debt with full court protection from creditors. It is possible to write-off most forms of unsecured personal debt in a short period of time. It is true that borrowing will be more difficult in the future, but bankruptcy is not a terminal condition. Making repayment on-time in subsequent months will mean that it is possible to improve your FICO credit score within the space of a couple of years.
Advantages of Filing Chapter 7 Bankruptcy
Debt-free. You can free yourself of most forms of unsecured debt in just 4 to 6 months.
Court protection. Under current bankruptcy laws, creditors are not legally permitted to contact you with respect to repayment once a petition has been filed. The only exception is in relation to the re-affirmation of debts, such as continuing to make payments on a car loan.
Exempt property. It is possible to keep any property that is considered exempt by the state you live in. Examples include your primary residence, family car and tools of the trade.
Counseling service. The 2005 bankruptcy laws requires that the debtor goes through a counseling session 180 days before filing. This is to help the debtor avoid any future financial difficulties. A charge of no more than $50 will be charged for this service and it can be provided in-person, by phone or over the Internet.
Foreclosure. The mortgage foreclosure process can be stopped whilst the debtor gets their finances back in order.
Disadvantages of Filing Chapter 7 Bankruptcy
Credit score. Bankruptcy will on your credit report for a period of not less than 10 years.
Non-exempt assets. Any assets that aren’t exempt will need to be handed to a trustee in order that they can be sold. The proceeds are disseminated to creditors on a pro rata basis.
Not all debt can be included. Student loans, alimony, taxes and car loans are specifically excluded under bankruptcy law.
Mortgage liens. Any liens on a property cannot be written-off.
Loan co-signers. Anyone who has co-signed a loan will not receive the same protection.
Qualification. Not everyone will qualify as your income will need to below the median for the state you live in. However, it may still be possible to proceed with chapter 13 bankruptcy.
Stigma. Although well over a millions Americans file every year, there is still a stigma attached.
Filing chapter 7 bankruptcy can potentially help you on the path to a new, debt-free lifestyle. However, there are several other debt solutions that may be more appropriate for your personal circumstances. Always consult a qualified debt counselor before proceeding.
Discover how to file bankruptcy under chapter 7 and clear credit card debt at best-debt-relief-solutions.com. Remember to bookmark our site in order to enjoy all of our latest financial articles.
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