For people who have lost their income or whose credit card payments are well into the thousands, bankruptcy is a good deal. The process is wiping the slate clean and a reset button on your finances.
Bankruptcies are generally categorized as either "liquidation" (chapter 7) or "reorganization (chapter 13). In chapter 7 you can completely wipe away your debt, but some portion of your equity (in property, for example) may have to be forfeited; in chapter 13 you can restructure your debt through a new payment plan and keep all your property.
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Losing property and the inability to get a job or a new loan due to high debts that you have not included in a bankruptcy can so strain an individual that it can cause marriages and even an individual's health to fail. Anyone who is considering defaulting on their debt knows what a nightmare it is, and bankruptcy is like a panacea: the rabid creditors will be gone in one single blow.
If you are someone who has no wages from a job and no assets and is considering bankruptcy because you're unable to pay your debt, you could decide to "take no action." When creditors aren't paid they can attempt to seize a debtor's property or wages, but, if a person doesn't have any assets or wages, the creditor is unlikely to be awarded anything from you. In short they can't take what you don't have. And after a number of years have passed, the debt will be taken off of the debtor's credit history.
Another option is to negotiate with creditors. Since creditors want the money you owe them, they may be willing to take a slice of it rather than risk losing it all if you do decide to file for bankruptcy or "take no action." Besides negotiating the amount of the debt, the structure of it could also be adjusted. This could help you pay the debt in a more realistic time frame, or in a different form of asset. The benefits to restructuring debt rather than filing for bankruptcy are that your credit is not as affected and it usually takes less time and effort. However, you will still have to pay the debt.
Most people get into terrible debt because they didn't live within their means. Of course, illness or other crises such as the death of a breadwinner can knock a well-functioning family off the table, but often huge amounts of debt accrue without your even noticing.
Working with a bankruptcy lawyer at the same time that you mentally prepare yourself for the major effort you'll need to pull yourself out of the hole you're in is the best solution. Bankruptcy can be considered the easy way out. Better to start a new life with your habits by stopping the buck at you and take responsibility for your spending. Avoid the legal paper work and pick up an application for that part-time pizza delivery job.
Cut your spending, work with an affordable bankruptcy lawyer, and look for some part-time work to supplement your income. Starting here is the best way to step back from the cliff of debt.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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