Bankruptcy

Has your credit card debt led you to the thought of bankruptcy? If so, there's a few things you should know.

Modification to bankruptcy has made it harder for consumers to discharge debts through bankruptcy protection. In fact, most filers with high to moderate incomes can no longer claim Chapter 7 bankruptcy, but will instead have to repay a portion of their debt under Chapter 13.

Additionally, all debtors now have to get credit counseling before they can file a bankruptcy case along with additional counseling on budgeting and debt management before their debts can be absolved. Also, it is sometimes tougher to find an attorney to represent you in a bankruptcy case because the laws have been changed for them as well.

In fact some debt settlement companies have bankruptcy attorneys working exclusively for them to resolve accounts for their clients in states that require an attorney for representation. In other words, bankruptcy attorneys are converting to debt settlement attorneys because the practices are much more beneficial to the debtor.

In other words if you choose bankruptcy services, you will pay out-of-pocket for a bankruptcy attorney, then pay an upfront fee to credit counseling services for their "Money Management and Budgeting Tips", then payback almost everything you owe to the creditors over a prolonged period.

Chapter 7 bankruptcy is sometimes called "liquidation" bankruptcy. Meaning the bankruptcy court can liquidate, or sell some of your property for the benefit of your creditors.

A chapter 13 bankruptcy, sometimes called reorganization bankruptcy, is quite different from Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, most of your debts are wiped out; in exchange, you must surrender any property that isn't exempt from seizure by your creditors. In a Chapter 13 bankruptcy, you don't have to hand over any property. However, you must use your income to pay some or all of what you owe to your creditors within three to five years.

After reading the aforementioned context wouldn't you find it obvious to avoid bankruptcy at all costs? Bankruptcy is not a painless procedure; it's more less a financial tattoo that last with you. Unfortunately, you'll take bankruptcy everywhere you go; to the bank when you need a loan, to the job interview and stamped on your resume, or to the dealership when you want an automobile.

Bankruptcy is listed in the top 5 life-altering negative events that people can go through, along with divorce, severe illness, disability, and loss of a loved one. Although not as bad as losing a loved one, bankruptcy is life-changing and leaves distant wounds both to the psyche and the credit report.