Bankruptcy

Many people who are in over their heads in debt think that bankruptcy is the only way out. Bankruptcy is a form of debt relief administered by the Federal Bankruptcy Courts, which gives it more legal power to protect you from your creditors than other forms of debt relief. There are essentially two types of consumer bankruptcy–Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also called “liquidation,” allows debtors to discharge most, if not all, unsecured debts. Chapter 7 is primarily designed for those debtors with a limited income and few assets. Chapter 13, also referred to as “wage earner's bankruptcy,” is a five year court supervised creditor repayment plan. In Chapter 13, you pay all of your disposable income to the bankruptcy trustee, who then distributes the funds to your creditors. Any unsecured debts remaining after five years are discharged.

Bankruptcy has many down sides, so you must weigh your options carefully before you take the plunge into bankruptcy. First, bankruptcy will stay on your credit report for ten years, which could make it hard for you to find an apartment, finance a car, or buy a house. Also, bankruptcy is a matter of public record, so anyone who runs a background check on you, like a potential employer, an insurance company, or any other person, could find out about your filing. In addition, recent changes to the Bankruptcy Code make filing bankruptcy much more difficult and expensive than it was in the past. The complexity of the new regulations has caused attorneys' fees for bankruptcy filing to more than double in many places. These new obstacles have made bankruptcy unavailable for many consumers, and have made a painful procedure even worse for consumers who still qualify to file. Thankfully, there are alternatives to filing bankruptcy.

The Debt Resolution Partners debt relief program is oftentimes a better alternative to bankruptcy. If you would like to learn more about bankruptcy or debt settlement, please call one of Debt Resolution Partners' knowledgeable Debt Consultants today!