Perhaps in response to these economic times, the media seems to be full of various companies offering people ways of getting rid of their debt. These advertisements are often accompanied with pictures of people who have supposedly gone through the process, and are now living wonderfully carefree lives.
How about “possession free”, or “house free”, even “marriage free”?
For obvious reasons, they feel that the consequences of bankruptcy are best kept hidden from prospective clients.
Filing for bankruptcy is not something anyone should normally do, at least that’s possibly the best way to regard it. Particularly the easy come, easy go nature of some of these financial companies. Remember, they make money, you lose it!
However, at the end of the day, many people do explore all options and still find that they have reached the end of their financial road, and bankruptcy is the only option left open to them
If, after exploring all the alternatives, bankruptcy appears to be the only option, then all the alternatives within bankruptcy itself should be explored. This would also include consideration of a chapter 13 filing.
13 bankruptcy is basically a repayment plan. Debt repayments are rescheduled allowing the business or individual to catch up over a 3 to 5 year period. One of the advantages of chapter 13 is that no assets are sold to pay their creditors.
By contrast, the more popular chapter 7 bankruptcy is, in effect, a liquidation of assets, with the proceeds being used to repay one’s creditors as far as possible. After all the relevant assets have been sold, and the proceeds split amongst the creditors, any outstanding debt that remains is no longer the responsibility of the debtor.
The 2005 Bankruptcy Abuse and Consumer Protection Act makes it compulsory for every chapter 7 applicant to be means tested. This is to ensure that all debtors are paid as far as possible, and if the court finds that the applicant can, in fact, under a repayment plan, pay all their outstanding debt, chapter 13 will be enforced.
So if you find that you simply can no longer afford to make all the monthly repayments you are scheduled to make, and you are going backwards financially, then bankruptcy may be the relief you need. But consider every other avenue before proceeding with this option.
Bankruptcy is never easy, in spite of what you might see on TV. It also has long term effects. However, if you want more free information on bankruptcy, especially chapter 13 bankruptcy law visit www.chapter13bankruptcylaw.net.