Bankruptcy Issues & You

Whenever anyone finds themselves in financial problems, the tendency is to cover it up and not to tell anyone. This can be detrimental to the family, of course, and merely ignoring the problem will not make it go away. If this does happen, getting debt relief may be the only answer. For those who decide to file bankruptcy, there are lawyers who will be able to lead the way through the legal maze.

Of course, going to great lengths to stay out of the court is probably the best way to deal with creditors. However, when all else fails, filing for Chapter 7 or Chapter 13 will give some respite and it is not always necessary to lose all that the family has built up.

Chapter 7 Bankruptcy is good for those people who have a lot of credit card debt or debtors who are harassing them. What the court does is to do a means test on the family. Any normal and not excessive expenses are taken into account and if there is a shortfall, the court will literally wipe out these creditors in one fell swoop.

If the family has some excess income over expenditure, then the court will file for Chapter 13. This means that the court will amalgamate all the money owed and work out a set payment plan. The good thing is that the debtor will now pay off the amount owed in a structured way and will no longer pay interest or be penalized for late payments etc.

Merely approaching the creditors to try to work out a payment scheme is not really workable since not all the creditors will want to go this route. However, putting it in court will mean that they do not have a choice.

This may seem like anyone owing money is getting off lightly. However, this is really not the case since they will only be able to avail themselves of this service once every eight years or so. Repeat offenders will also not be entertained so well with the court because the idea is that they start to learn how to live within the parameters of their budgets.

Once the court has become involved it will stop anyone from harassing the person owing money. No more threatening letters or bailiffs coming to the door. This gives some much needed respite for those who are unfortunate enough to find themselves in this position.

At one time, if anyone found them selves unable to pay what they owed, the court could have taken everything they owned to sell and try to wipe out the outstanding amount. However, in this day and age, where people find them selves suddenly in a big problem, something had to be done. This is why both Chapter 7 and 13 was brought into being.

Although people are being far more prudent when it comes to over reaching them selves, unfortunately mistakes do happen and this is when the professional will be able to come in and save the day.

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