Should Bankruptcy Be In Your Future?


No matter which way you look at it, filing for bankruptcy might be one of the biggest decisions you'll ever have to make in your life. Taking a simple test can make that decision a little easier. If you have less than $200 a month left after you pay your rent, car payment, food, clothing, insurance, phone and utilities, just your standard living expenses with no credit card debt, you should consider filing bankruptcy. Next, if your other debts consist of credit cards and medical bills, you are one step closer to moving from a maybe to a positive. Lastly, if you have the possibility of losing your job or are already unemployed, the answer to filing for bankruptcy moves from a possible positive to a definitely. There are other problems that can add fuel to the fire, such as, a debilitating illness or family problems like getting divorced or separated that will push your finances into a tailspin.

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Nowadays, Americans can't turn on their TV or pick up a newspaper without hearing something about the foreclosure rate. This is not a phenomenon but a reality for many people, maybe even those living next door. Recently reported on the news, one in five are in danger of falling into foreclosure. When people get behind they get deeper and deeper in debt, especially when they're only able to make the minimum payment. There are many ads on TV for loan modifications which currently have about a 90% failure rate. Considering this bit of information, the best resolution seems to exist in a bankruptcy filing.

Many individuals in arrears on the mortgage on their home consider selling it before it ends up in foreclosure. The only problem with this idea is current market values have dropped so much that many people will owe more on their homes then they are worth. A lender will need to approve a short sale for the debtor to be able to get out from under the debt of the house. The downside to short selling a property is many lenders will try and get a judgment for the deficiency of the loan. This is where bankruptcy shines. If you want to get out from under the house a Chapter 7 bankruptcy will wipe out any deficiency owed to the lender. If you decide that you would like to try to keep the home, the best form of bankruptcy is a Chapter 13. A Chapter 13 bankruptcy allows the debtor to catch up on the mortgage arrears over time as long as they stay current and continue to make the payments. Along with the mortgage note all other debts will be put into a 3 to 5 year payment plan with many of the unsecured debts getting wiped out at the end.

Whichever chapter of bankruptcy you decide on, the bankruptcy discharge will release you from all personal liability on discharged debts. The creditors that were owed those debts will not be able to take any action against you or your property to collect those debts in the future. When it comes to chapter 7 bankruptcy cases, about 99% of debtors receive a discharge with no problems. In a Chapter 7 bankruptcy your discharge should come about 60 days after the 341 meeting. On the other hand, with a Chapter 13 bankruptcy, the discharge comes at the end of the 3 to 5 year payment plan. Either bankruptcy that you choose will put you in the direction of a debt-free future as long as you learn from your mistakes. When selecting bankruptcy for debt resolution it's important to consult with a bankruptcy attorney to check out all of your options.


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