Is Bankruptcy The Right Option For You?

By Author: William Hauselberg
Total Articles: 816
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Distressed debtors who are rapidly approaching the point of no return are typically scared about filing for bankruptcy. This is entirely appropriate. After all, why should someone feel good about the fact they are ruining their credit report and branding themselves as unworthy to receive credit? In today's society, having good credit is as essential as air, and if you don't, you have nothing. Without good credit, say goodbye to a job, a place to live and even a car, in some circumstances.

Why Bankruptcy Can Be Good

Bankruptcy only works for you when you are already in dire straits. An enormous amount of unpayable debt, like credit card debt, is usually the tipping point for most people. You must understand the differences between Chapter 7 and Chapter 13. Chapter 7 is known as the liquidation chapter. Under Chapter 7, your assets are divided into two categories: exempt and non-exempt. Which assets fall into what category depends on the state you live in. Non-exempt assets are all sold off, and the proceeds are used to repay creditors. The bankruptcy court will allow you to keep all exempt assets.

Chapter ...
... 13 is different from Chapter 7. Under Chapter 13, you create a repayment plan and submit it to the bankruptcy court. The court then uses its authority to enforce the repayment plan on your creditors. Chapter 13, unlike Chapter 7, can save you from foreclosure, despite the fact the lien on your house is not discharged.

Consumer Debt Counseling Options

If you don't want to file for bankruptcy, you may be able to take advantage of consumer bankruptcy counseling. This is like sitting down with a guidance counselor about your failing grades in high school. A good consumer bankruptcy counseling session can help put you back on the right track and help fix your finances.

Consolidation debt management is also an alternative. You may want to consider debt management if your debts are grossly larger than your income. Debt management companies may be able to negotiate with your creditors. Consolidation debt management only works for debtors in certain situations. In fact, this option may not be right for you at all.

In the end, only you can decide whether to go through the agony of bankruptcy, and which chapter is right for you. Bankruptcy is devastating and can leave you with a sense of guilt. The price is high, and you should only pay it if you have no other choice.

The author of this article has expertise in debt management. The articles on Consolidation debt management reveals the author’s knowledge on the same. The author has written many articles on consumer bankruptcy counseling as well.