Chapter 7 Bankruptcy and How It Can Affect YouAlan King
May 15, 2009 — 1,302 views
Occasionally debtors digg themselves a hole so deep that they possibly could be pressured into filing for bankruptcy.
Only as a last choice would that be advisable; it stays on a persons credit report for at least seven years and could make it more difficult to purchase or even rent a home, to purchase a car, to apply for just about all kinds of credit, etc..
The two most usual kinds of bankruptcy are Chapter 7 and Chapter 13 bankruptcy. At this moment we are going to discuss Chapter 7 bankruptcy.
In a Chapter 7 bankruptcy there is no repayment program. Whatever assets that the debtor owns that are not excused - and this varies in each state - are sold off to pay back debtors and the majority of debts are wiped clean. Assets might include TV sets, computers, auto's, pieces of furniture, articles of clothing, home, bike, jewelry...there is an abundant list of things which could be taken and auctioned off.
After Chapter 7 bankruptcy the debtor in all likelihood will still owe on income taxes, school loans, alimony, child support, and some kinds of court judgments including injury caused by driving under the influence.
Although it may appear ideal to wipe clean all of one's debts and start over, Chapter 7 bankruptcy isn't an everlasting solution for some people. There are also moral and ethical implications to think about.
And as a matter of fact, some folks might find that their income is too high to qualify for Chapter 7 bankruptcy, in that event they would have to to file for Chapter 13 bankruptcy, which involves a five year repayment plan.
The judge will evaluate a number of components when choosing whether to allow for the filing of a Chapter 7 bankruptcy. They don't want people to rack up enormous amounts of consumer debt, like going out and buying expensive toys like new boats, big screen TV's, Sea Doo's, etc. - and then try and wipe away their responsibilities with a bankruptcy.
Some possible extenuating circumstances can be medical bills, disability, unemployment, etc.. Sure enough there can be logical possibilities why an individual might have to file for Chapter 7 bankruptcy.
It's up to the bankruptcy judge as to whether or not he or she will allow the filing of a Chapter 7 bankruptcy plan. The judge has the option of changing over the case to a Chapter 13 bankruptcy or dissolving it entirely.
Prior to filing any type of bankruptcy it would make good sense to consult with a bankruptcy attorney to find out which kind of bankruptcy is most suitable to file, or whether there are more effective options than a bankruptcy filing. Just keep in mind that asking a bankruptcy attorney if you should file for bankruptcy is like asking a child if they would like a new toy. Of course they are going to likely recommend that you file.
In the majority of cases, bankruptcy is not the best option. When folks get to this point, debt is usually not the problem. It is usually an income crisis. If the money was there and or coming in on a regular basis, they could widdle there way out of debt through negotiation with creditors. The best thing to do is to sell off or amputate all the indulgent things in your life you bought because you wanted it and not because you needed it, and work out either a payment plan with creditors, attorneys or lenders or better yet if you are really behind negotiate settlements on your delinquent debts for pennies on the dollar. Additionally, you should do whatever you can to get the income up such as take on another part time job until you can pay down the debt and get your life back in order.
About the Author
Alan King is committed to helping people successfully get out of debt using a practical common sense approach. To learn more on how to become debt free in as little as 3-5 years no matter your income visit http://www.onlinewaystowealth.com/