Being seriously in debt can be a seriously bad thing. You could have debt collectors harassing you unmercifully or even have a lien put on your property or seize one of your assets. For that matter, you may even be suffering physical symptoms as the result of the stress you’re feeling over your debts. Many people struggling with debt have suffered heart problems, acid reflux disease, insomnia and other health problems. Of course, if you’re having a serious problem with debt, you already know much of this firsthand.
It can be tempting
You’ve probably seen those attorneys’ ads offering to handle your bankruptcy for $500 or even less. This can be very tempting. A bankruptcy can be completed in 3 to 6 months and will relieve you of many of your unsecured debts such as credit card debts, personal lines of credit and medical bills.
Reason #1: 10 long years
As tempting as bankruptcy might seem, think long and hard before you file. There are some serious downsides to a chapter 7 bankruptcy you need to consider.
A bankruptcy will stay on your credit record for 10 years. Bankruptcy filings are public records so any prospective employer or landlord could see that you had a bankruptcy, which could cost you a job or a place to live. You would not be able to get a standard mortgage or an auto loan for the first few years after your bankruptcy nor would you be able to get an unsecured credit card – unless you were willing to pay an ungodly high interest rate.
Reason #2: Debts that can’t be discharged
Despite what you may have been led to believe, a chapter 7 bankruptcy will not discharge – or get rid of – all of your debts. For example, a bankruptcy will not discharge student loan debts, past due taxes, child support or alimony, and any debts that were incurred by fraud or malicious acts.
Reason #3: A chapter 7 bankruptcy is a liquidation bankruptcy
Is important to keep in mind that a chapter 7 bankruptcy is a liquidation bankruptcy. This means it’s basic purpose is to liquidate your assets so your creditors can be paid as much as possible.
Reason #4: You can’t keep everything
What you can and can’t keep as the result of a liquidation bankruptcy varies from state to state. However, in general, you will be able to keep up to $6000 in equity in your automobile and up to $50,000 of equity in your home. You will also be allowed to keep any tools that are required in your job and your retirement account (with certain limitations). You will be also allowed to keep personal possessions such as your furniture and clothing.
Reason #5: Losing prized possessions
If you have other possessions that have some value, your bankruptcy judge or trustee could order them to be seized and sold at auction. This might include some of your most prized possessions such as heirloom antiques, your boat or vacation home.
A better solution
People who don’t want the stain of bankruptcy on their credit record available for all to see or who don’t want to lose some of their possessions have chosen instead to let us help them with a debt settlement plan. We negotiate with creditors to have our clients’ balances and interest rates reduced. We also help them develop affordable payment plans that can get them out of debt in 24 to 48 months. Call our toll-free number today or fill out the form you’ll find on this page to learn more about debt settlement and why it’s a much better alternative than bankruptcy
