Christian Debt Consolidation Guide - Bankruptcy

Sometimes it is too easy to declare bankruptcy believing it can be the best solution to our debt problems, especially, if they appear insurmountable. It is not however an easy option and carries some serious consequences which are often not fully explained. In this Christian Debt Consolidation Guide article we will attempt to provide some really practical information on bankruptcy but please, please never act in this area without taking professional advice.

There are basically two types of bankruptcy from which to choose:

Christian Debt Consolidation Guide - Chapter 7 Bankruptcy

Under Chapter 7 we are effectively asking the court to forgive all our debts. We are required to surrender all of our assets that are not exempt (this varies from state to state). Exempt property will usually include some home furnishings and the tools of our trade. A court appointed trustee will handle this process.

Filing for Chapter 7 Bankruptcy ends any wage garnishments and the harassment from debt collectors. It is however an emotionally charged experience. The appointed trustee screens all of our transactions for an extended period of time. This is pretty humbling often accompanied by feelings of failure so support from our Church can be very comforting.

Christian Debt Consolidation Guide - Chapter 13 Bankruptcy

Under Chapter 13 we may keep a mortgaged house and car and rather than surrendering all assets we look to pay off debts over a typical 3 to 5 year period.

The court will determine our monthly disposable income and this amount is handed over to the court appointed trustee who in turn allocates the amount to our creditors.

At the end of the term any remaining debts are usually discharged. This may sound a better option than Chapter 7 Bankruptcy but again each case has to be examined on its own merits. We all have unique situations and the most appropriate choice (which may not be bankruptcy) will vary according to many different criteria.

I have to be honest and say that filing for bankruptcy should be considered as the option of last resort as the consequences are far reaching. There are other options such as Christian Debt Consolidation, Christian Debt Management Plans, Christian Credit Counseling and Christian Debt Settlement to name some.

Bankruptcy affects our credit report for between 7 & 10 years and even after this period of time we can still experience difficulties if we are looking to obtain new loans or credit.

If this article achieves anything it is to encourage Christians to explore every option to solving debt problems. That's why, again and again it is recommended that professional advice is sought from a firm willing to explore all the options. Don't believe all the advertising hype suggesting one solution will solve all your problems. It takes a combination of many and all of our needs are unique.

Please let Bankruptcy be the option of last resort and only if recommended by a Christian Debt Consolidation Counselor. To do otherwise could leave you with increased debts and an even more intolerable situation.