At some point in life many people will face overwhelming debt and not know what to do to fix it. For some it may be possible to consolidate and be able to make payments. Some will have no other option but to file Chapter 7 bankruptcy. This is consumer bankruptcy and is the fastest and most common form used.
Chapter 7 bankruptcy is used for debts that do not have collateral, or unsecured debts. This will include debts such as credit cards, medical bills, and personal loans. Debts such as child support, alimony, court judgement, and/or back taxes will generally not be eligible. Though this will help in getting out of some debts that are drowning you, it will leave a very serious mark on your credit. It is not a decision to make lightly. After filing it will take several months before your credit will begin to see any improvements.
Everyone who wishes to file for Chapter 7 bankruptcy may not qualify. For starters, anyone who has filed Chapter 7 or 13 bankruptcy in the past 6-8 years will not qualify. It is also necessary to pass the means test. This test will investigate your income, assets, and expenses. If you do not pass this test, then you will be unable to file. There are online calculators that may assist in deciding if you will qualify before speaking to an attorney or trying to file on your own. A third stipulation is for anyone who has filed a Chapter 7 or 13 bankruptcy petition in the past 180 days and it was dismissed due to failure to appear or comply with court orders.
This is not an immediate fix or a cheap expense. It can take around 6 months to complete and there are several steps that must be completed before filing the petition with the court. Even if the petition is filed, it does not mean that the relief will be granted. To complete this process, it is necessary to seek credit counseling and to find a qualified lawyer. During this you will find out if you even qualify to be able to file the petition. This should only be used as a last resort.
There are other options available to people needing to seek debt relief. As stated before, debt consolidation is a viable option for many. Debt consolidation is done through a company. Brian Talbot from Evolve Loans says that many homeowners use debt consolidation companies to help them repair credit history and pay off debts as quickly as possible. The consolidation company can combine most of your debt payments into one lump sum. For this to work debt should not be more than 50% of your income. It is also necessary to have a plan in place to get your debt under control and to keep your credit good.
Sometimes people find themselves with uncontrollable debt. The important aspect of this is to get it under control and to figure out the best options for your individual situation. Is it time to file for Chapter 7 Bankruptcy?
Join the discussion on this topic with Let’s Be Game Changers by visiting our contact page.