Anytime I hear the bankruptcy the first thing that pops into my mind is Chapter 7. If you would've asked me couple of years ago what a Chapter 7 bankruptcy was I honestly would not have been able to tell you all I knew for certain was that was one chapter I wanted to steer clear of. I am sure we all have a similar variation of what bankruptcy is. For some filing for bankruptcy is possibly the clean slate they needed.
It is a situation no one ever wants to see themseleves in. However it does happen more often than we'd like to think. If you do happen to find yourselves in a place where bankruptcy is looking like it may be the only option I am here to tell you;
"It is not the end of the world"
Yes, it will most likely forever come up on your credit report even long after the time period has passed.
Yes, you will most likely have to explain the bankruptcy everytime you apply for credit.
However, if you took the opportunity given and truly used the clean slate to learn how to manage your money then the benefits of a bankruptcy could out weigh the con's.
Types of Bankruptcies
Chapter 7
- 10 years on your Credit Report
- Complete Liquidation of Debt
Chapter 13
- 7 years on your Credit Report
- Reorganization of Debt
- Consolidation of Debt (payment plan with lower monthly payments)
Short-Term Benefits
The immediate relief when filing for a bankruptcy are the end to the continuous collection calles that usually border on harrassing. It will also prevent creditors from continuing to charge your account late fees or finanace charges.
Long-Term Benefits
Chapter 7 bankruptcy is the most common form of banruptcy files and is simply the liquidation of all the debt you included on the filing. (This will not however cover any debt accumulated after the bankruptcy filing date.) If approved your creditors will come to terms with the bankruptcy court and be paid a portion or all of the amount owed reliving you from any further obligation. For those that have been living pay check to pay check this bankruptcy will give them the breathing room to catch up financially.
What a Bankruptcy Can DO
- Eliminate the legal obligation to pay most or all debts.
- Stop a foreclosure on a home and allow the debtor an opportunity to cure a default
- Prevent a repossession of a car or other personal property
- Stop wage garnishments
- Debt collection harassment
- Prevent termination of utility service or restore service if it has already been terminated
- Lower monthly payments on some debits including secure debt such as a mortgage loan and car loans
What a Bankruptcy Cannot DO
- Modify certain rights of secure creditors
- Student Loans click here to read more
You DO have Alternatives
Don't wait until your already 2 months behind on your mortgage and barely paying your monthly bills. Do not make the mistake of thinking that you can catch up. Many have lost their homes to foreclosure because they waited to long to file for bankruptcy. A bankruptcy cannot halt a foreclosure once a sale has been made. So if you have received a default letter or have been served with a Lis Pendes now is the time to act. Here are some alternatives that could possibly help.
- Out of Court Settlement with Creditors
- Mortgage Loan Modification
- Consolidating your debt
- Obtaining help from a credit counseling service
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