Tuesday, December 8, 2009
Get Rid of Consumer Credit by Filing for Bankruptcy
If after you’ve exhausted all other available debt reduction services, you have yet to find a solution to your unmanageable financial dues, maybe it’s time for you to consider bankruptcy as a viable option. Although the very idea of filing for bankruptcy carries with it some really negative connotation, in certain situations, it just might be the answer consumers are looking for.
As surprising as it sounds, a huge percentage of American consumers are still in the dark when it comes to bankruptcy alternatives. This has encouraged the government to require people looking into bankruptcy to undergo a Means Test as indicated as indicated in the Federal Bankruptcy Laws of 2005.
This Means Test is simply meant to determine whether you are capable or unable to pay off your financial liabilities based on your current income and other funding sources. To qualify for Chapter 7 Bankruptcy, for example, your income must be lower than the median income of households with similar lifestyles in your state of residence.
As bankruptcy is a highly legal procedure, like most debt reduction services, it’s often best to enlist the help of experienced bankruptcy attorneys when considering this as an option.
So how does it work?
In Chapter 7 Bankruptcy, a court-appointed trustee takes your non-exempt properties and sells them off. The collected amount from this sale is then used to pay off your creditors. Property exemption may be based either on federal guidelines or state guidelines.
Repayment in the form of Chapter 13 Bankruptcy is slowly gaining popularity as a potential debt elimination solution as well. Consumers with a steady income may bring their debts to current as a repayment plan is worked out with their creditors. While this particular kind of bankruptcy carries less of the downsides with it, the economic recession has made it harder for people to hold down their jobs and maintain a stable source of funding, which in turn makes them ineligible for this.
It’s true that these bankruptcy options can get rid of your unsecured debts but as it can deal your future finances a relatively devastating blow, both consumers and people offering debt reduction services should be careful not to consider this a primary option. Potential employers, and now even landlords, may choose to pull out your credit record and use it to gauge your capability to manage finances.
To avoid massive damage to your credit record, seek the help of a debt specialist or a debt reduction lawyer to make sure that you’ve looked into all other possible alternatives.
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