Use Chapter 7 Bankruptcy To Become Debt Free
If you don’t qualify for bankruptcy because of the situation above, you could try settling your debts through negotiation. It sounds like a good idea short of Bankruptcy, but it rarely works out that way if you have a lot of debt compared to your current income.
Most debt negotiators operate on a specific idea. You will save up the money to make a settlement offer to each lender in turn until all your debts are gone. It’s an alternative to a debt management plan, offered by more traditional credit counselors, which pays your debts back in full overtime would reduce interest rates and each creditor gets some money each month. Debt settlement or debt negotiation sounds like it should save you some time and money. And it could keep you from having to file bankruptcy. One downside to debt settlement is it will ruin your credit almost as bad as a Chapter 7 bankruptcy where you don’t have to pay your debts back.
One of the main benefits of filing Chapter 7 bankruptcy is it provides an order of relief that triggers an automatic stay that all creditors and collectors are prohibited from pursuing you or your property outside of the bankruptcy proceeding. This is especially important if you received a foreclosure notice.
Chapter 7 bankruptcy is also known as a straight bankruptcy or liquidation bankruptcy because the trustee gathers and sells your nonexempt assets and then distributes the proceeds to your creditors in accordance with the provisions of the bankruptcy code. You are permitted to retain certain exempt property but all the remaining assets, if they have any sustainable value, are liquidated by the bankruptcy court trustee. You should also understand that if you file a Chapter 7 bankruptcy you could lose some of your property. This may be an advantage or disadvantage depending on how much equity you have in these assets.
The Chapter 7 bankruptcy code allows you to keep property and assets by claiming them as exempt under the federal or state exemption laws whichever applies to your state. This is why most people choose Chapter 7 bankruptcy because it truly gives him a fresh start in life being debt free.
