Bankruptcy - Are There Better Options?

Bankruptcy - Are There Better Options?

Are you overwhelmed with debt? Do you get harrassing calls night and day? Do your kids need school supplies and new clothes and shoes, and you are simply concerned about feeding them? Will your gas be shut off soon? Are you immobilized? Are you feeling you have no where to turn?

When you are overwhelmed with debt, the enticement might be solely to throw up your hands, run away from it all, and declare bankruptcy.

Bankruptcy should only be a last resort, for a variety of reasons.

1. It is not that simple to start over with a clean slate any more. An impactful law called the Bankruptcy Abuse Prevention And Consumer Protection Act of 2005 makes it extraordinarily difficult for buyers to discharge their debt.

2. It forces debtors into a debt repayment plan that runs for at least five years and barely allows clients to keep up during this period, in which the debtor must pay the overwhelming majority of their revenue towards a debt plan they have little control over.

3. Bankruptcy remains on one's credit history for as much as 10 years. And if an employer, mortgage or car finance company asks if you've ever announced bankruptcy, of course you must answer truthfully.

So that means that in a lot of ways, bankruptcy remains on your record for the rest of your life.

4. Bankruptcy isn't guaranteed to discharge your debts.

For instance, you still must pay taxes, you must still pay child support, you must still pay student loans, and there are plenty of other obligations you are required to pay.

This is not to indicate that one need to never consider bankruptcy under any circumstances.

You should consult with a qualified bankruptcy lawyer before you do anything, though, and be completely fair about your situation and your prospects for earnings in the following couple of years.

You should also do online research before you even go speak to a solicitor, so you can make the final decision yourself. You need to know the difference between Chapter 7 bankruptcy and Chapter thirteen bankruptcy, find out precisely how long each sort of bankruptcy will remain on your credit score, and discover what sorts of liabilities you will continue paying. You need to get a pragmatic view of what life will be like after you filedeclare Chapter 13 bankruptcy.

Chapter 7 basically means handing over all property not exempted from bankruptcy proceedings so it can be sold off to repay yourdebt. There isn't any repayment agreement. It stays on your credit report for up to 10 years and nowadays, with the new bankruptcy laws, many people who are not earning that much money find that their income is too high to qualify for this option when taking the Means Test.

Chapter 13 involves a repayment agreement and stays on your credit report for 10 years, though it is often taken off after 7 years.

So before you're making a call that will affect your life and your credit for decades to come, do your analysis, find out whether it is worth filingdeclaring bankruptcy, and consider your other options, such as making an attempt to create your own liability payoff plan - one that you have control over. Other options might include a sale of your house, a loan modification, selling off assets, public assistance, and others.