People sometimes go through extreme economic turmoil. They find themselves surrounded with huge amount of debts and fail to handle the outstanding amounts. During such a financial upheaval, most people take up bankruptcy as the best option to get release from their debt afflictions. This helps them to start with fresh endeavour to restore a sound financial condition.
Filing bankruptcy is a very complicated process. There are certain new laws which has made filing bankruptcy even more intricate. According to the new law, filing for chapter 7 bankruptcy is only possible if you have no monthly income. When you file for chapter 7 bankruptcy, the court seizes some of your assets in order to sell it and pay back your debts. These seized assets are called non-exempt property. The rest of the property which you are left with you are called exempt property.
If you have a minimum amount of income, then you are not eligible for the chapter 7 bankruptcy. Instead you will have to file it under the chapter 13. In chapter13, you will not be required to surrender your property to the court to repay your debts. The reason is that, chapter 13 offers a repayment plan suggesting how to repay your debts to your creditors easily. You can utilize your monthly income and other monetary resources to pay off your debts.
Filing for bankruptcy seems to be the easiest way to get relief from debt clutches. Nevertheless, there are certain drawbacks that you can experience after filing for bankruptcy. It will affect your credit report adversely which will force you into several years of difficulties. Owing to this negative credit remarks you may not receive loans or credit cards further. Hence, filing bankruptcy should be the last option to get relief from prevailing debts.
Alternatives to Bankruptcy
If you want to avoid filing for bankruptcy and yet want to repay your debts, there are some alternatives. You can opt for a debt settlement program. As soon as you enroll with a debt settlement company, they negotiate the debt amount including the interest rate with your creditors on your behalf. You are then only required to pay the reduced amount to the settlement company and they will disburse the amount to your creditors.
Debt consolidation is another way to rule out your debts. When you enroll with a debt settlement company, you get a single loan so as to recompense your all other debts. Both of the above debt relief options will bear a negative influence in your credit report. However, it will be still better than the detrimental and harmful effects of filing bankruptcy.
Posted by Editor Bankruptcy Alternatives @ 2:43 pm