A common New Year’s resolution is to get one’s financial affairs in order. When there is a lot of debt, that can be difficult. Credit card interest rates can make it even more difficult, as many borrowers find themselves just treading water on their debt, and never paying it off.
If you find yourself in a situation where you can barely pay your mortgage or rent along with the basic necessities for you and/or your family, bankruptcy may be a solution to your debt problems. A Chapter 7 bankruptcy allows a debtor to eliminate most unsecured debt, and some secured debt as well (when the secured property will not be retained).
In most Chapter 7 cases, debtors are able to keep their homes (if there is not too much equity) and cars as long as they can keep those loan payments current. Most debtors also retain all their assets because bankruptcy is often used as a last resort, after most assets have been exhausted.
The benefits of a bankruptcy often outweigh the negative credit effect because most people do not consider bankruptcy until their credit is already relatively low. Thus, the bankruptcy filing and discharge of debts may not lower the credit score much. However, removing credit card debt, medical bills, unsecured loans, and other similar debts can make it much easier to organize your current financial situation and return you to point where you have control over how you use your money.
Most debtors who file bankruptcy and receive a discharge of their debts are able to restore their credit to what it was before they filed within a few years, and then increase it from there to the point where they can obtain loans and credit with reasonable interest rates.
If you are considering bankruptcy as an option to get a fresh start, it is best to consult with an attorney to make sure you will qualify for Chapter 7 and that you will be able to keep your assets. Bankruptcy is not a simple process, but it can be a lifesaver when you find yourself in too much debt with nowhere to turn.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.