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Reasons Why People Choose Chapter 7 Bankruptcy To Become Debt Free

April 20, 2012 | Comments: 0 | Views: 142

There are a few choices for individuals who are in a financial crisis to reduce or eliminate their debt. There is debt consolidation which requires the individual to take out a loan to cover all of their outstanding debt and then make one payment monthly. There is debt settlement that offers a way for the individual to pay about 50% of their debt back. The problem is they usually need to come up with the payment in a lump sum for the creditors which can be difficult when someone is short on cash.

Another option is to file a Chapter 13 bankruptcy. This requires the individual to come up with a repayment plan that will last for the next three to five years to pay back their creditors. These may be possible options for someone to consider but the thing to keep in mind is that all of these require the debtor to have a consistent income. What about the many individuals that have lost their jobs, are underemployed, or just plain old are so deeply in debt that they cannot pay their bills?

This is where a Chapter 7 bankruptcy comes in. Chapter 7 Bankruptcy is probably the most common form and also best preferred choice for most people who have a large amount of mostly unsecured debt such as credit cards, medical bills, and personal or payday loans. Chapter 7 bankruptcy has many advantages including, the debtor is protected through the US Bankruptcy Code and the automatic stay during the entire process. The debtor will no longer be subject to creditor harassment or legal proceedings such as wage garnishment or law suits.

A Chapter 7 bankruptcy is a fairly quick way for the debtor to become debt free or close to it. A typical Chapter 7 case takes about 3- 6 months from beginning to end. Once the bankruptcy has been filed with the court, the debtor will attend the creditor's meeting about 30 days later. If all goes smoothly the debtor should receive their bankruptcy discharge in the mail about 2 months later. Chapter 7 Bankruptcy is king when it comes to completely wiping out unsecured debts as well as old taxes in certain cases. This allows individuals that are buried under a mountain of debt to get a fresh start at financial success. Lastly, Chapter 7 bankruptcy offers protection of the debtor's property. Unless the debtor decides to voluntarily surrender property, if they can continue to pay for it then they can keep it. Sometimes all it takes is for a financially strapped individual to have their unsecured debts wiped out and then they can afford to pay for their car or home.

Also, many individuals who file Chapter 7 Bankruptcy do not lose any property or assets that they own outright. There are Federal as well as State exemption laws that allow debtors to protect substantial amounts of their property. This results in debtors being allowed to "keep their stuff" during a bankruptcy filing.

The bottom line is, when someone is struggling with large amounts of debt there are options available, including a Chapter 7 Bankruptcy. The best way to get started on the road to becoming debt free is to consult with a local experienced bankruptcy attorney to discuss your personal financial situation.

The author started DebtFreeBankruptcyAttorney.Com which is a website that helps individuals with debt problems by putting them in touch with a local bankruptcy attorney that specializes in filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy. Check our website for more answers to bankruptcy questions and ideas on how to have a debt free future.

Source: EzineArticles
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