Bankruptcy
Personal Bankruptcy
Personal bankruptcy is a legal procedure that was originally meant to give people with overwhelming debt a fresh start. The impact to the consumer’s credit report and credit score although, is significant. Bankruptcy will often remain on one’s credit report for as long as 10 years. During this time it can be difficult to obtain an unsecured loan or credit. If you are able to find a lender who will do business with you, you can be sure that due to your bankruptcy and subsequent low credit score you will pay the highest possible interest rates allowed by law.
Two Forms of Bankruptcy For Consumer: Chaper 7 and Chapter 13
Chapter 7 is a traditional, or "straight" bankruptcy, which often entails the liquidation of the consumer’s assets, depending on the state in which they live. Property under dispute in the bankruptcy is sold by a court appointed trustee or it is simply returned to the creditors. It is in some cases the best solution. A consumer may or may not qualify.
Under the new bankruptcy law a debtor must take a "means test" that will determine his or her ability to pay back the creditors. In a nutshell, the rule is that if your income is above the average for your state, OR if you can afford to pay more than $100 per month to your creditors after all of your reasonable expenses are taken into consideration, then you will probably not be allowed to file a Chapter 7. Federal law only allows consumers to file for Chapter 7 every six years.
Chapter 13 involves reorganizing the debt so that the consumer can keep property they might otherwise lose, i.e. a home or car. This allows a ceratin number of years for the debtor to pay the items off as opposed to losing them entirely. It is a solution wherein you make monthly payments to a court appointed trustee for a period of 3 years if your income is below the state median, or 5 years if it is above the state median. The amount you pay is as much as you can afford to pay – meaning that your reasonable living expenses are subtracted from your income, and everything left over goes to the trustee.
The credit card companies control a very powerful lobby in Washington D.C. They spend millions of dollars every year to attempt to influence laws that are made in the arena of credit and consumer finance in their direction. In 2005 this lobby passed new legislation that makes it very difficult for an average consumer to obtain a Chapter 7 Bankruptcy.
So, if the discharge of your debts through Chapter 7 bankruptcy is no longer an option, then the Chapter 13 repayment plan becomes a consumer’s only hope. This Chapter 13 is essentially a payback plan, yet it carries the same negativity as a Chapter 7 bankruptcy filing.
Debt Settlement Option
We invite you to become acquainted with our debt settlement program. Through our debt settlement techniques, we can settle your debts for less than a Chapter 13 payment plan would cost, while at the same time saving your credit report and your credit score from the most negative mark it could possibly have. We think that after speaking with one of our counselors, you will find that our Debt Settlement program is the only logical alternative to bankruptcy.
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