With the current state of the US economy, it looks like Americans might be hit with a one-two punch with inflation following the recession. Individuals are already struggling just to make ends meet, and this might put the final nail in their coffin. It's expected that the amount of those filing for bankruptcy will continue to rise through 2011 and on. Before someone decides on filing bankruptcy, they should first learn about the entire process and the consequences that follow. Many people wait until it's too late using bankruptcy as a last resort. Bankruptcy is a very powerful tool that can be used in the proper financial situations. People that are in a situation where they can't afford to keep a roof over their heads, along with paying for their credit cards, probably qualify. When deciding to file personal bankruptcy, there are many factors that need to be considered and thought about. Consulting with a bankruptcy attorney to get your options would be a good start. Also search the web for government and legal websites that offer a lot of good,free information.
There are alternatives to filing bankruptcy such as debt settlement. Don't believe the advertisements you see on TV or hear on the radio that give the impression that debt settlement will not harm your credit as bad as bankruptcy would. In fact, going the debt settlement route can even be worse because of the large past due balances, and when the negotiated amount is paid off, they'll report a charge off to the credit agencies. Usually, in a debt settlement they ask for 50% of the amount owed. In a chapter 7 bankruptcy the debtor will virtually end up debt free as all unsecured debts are completely wiped out. In a Chapter 13 bankruptcy, the debtor rarely pays very much to the unsecured creditors as the secured creditors such as a mortgage get first priority to the debtor's wages. A Chapter 13 bankruptcy will allow a debtor to get the payments caught up on his house, and at the end of 3 to 5 years if there is anything left, the unsecured creditors will get what's left.
Filing bankruptcy is the most popular form of debt elimination because it has many advantages. The number one reason why debtors try to choose Chapter 7 bankruptcy is because there is no repayment of any debts. For most debtors bankruptcy's good outweighs the bad. Before deciding for yourself, take the time and see if the disadvantages will be a deal breaker. One main advantage of bankruptcy is the protection that it gives debtors through the automatic stay. The automatic stay stops all collection activity against the debtor, allowing them to figure out what they need to do next.
Many debtors, after discussing their finances with their bankruptcy attorney, decide to let some property go because it won't be beneficial to try and hang on to it. This can be accomplished because of the quiet time that the automatic stay gives. In a Chapter 7 bankruptcy, the automatic stay is in place for a limited amount of time as the bankruptcy moves pretty quickly. This will only give the debtor a couple months to get caught up on a mortgage if they're trying to prevent a foreclosure. If there is real estate involved it's important to consult with a bankruptcy attorney to advise on whether to file Chapter 7 or Chapter 13. You can definitely see why bankruptcy is king over debt settlement.
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