Ads for debt relief are often times thinly-veiled ads for bankruptcy. But there is a better way to seek debt relief than giving up and filing chapter 7. There is no reason why any consumer would have to do that. Not with the overwhelming amount of financial resources currently available. It's an explosion!
Debt relief and you
There are two primary types of personal bankruptcy that are advertised as debt relief: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. The current filing fees are $185 for Chapter 13 and $200 for Chapter 7. Attorney fees are additional and can vary widely. The consequences of bankruptcy are significant and require careful consideration. Usually you don't want this unless you are completely desperate for debt relief and have no other options.
Chapter 13 allows you, if you have a regular income and limited debt, to keep property, such as a mortgaged house or car, that you otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to pay off a default during a period of three to five years, rather than surrender any property. This is a good kind of debt relief but stays on your credit report forever - a smear, if you will. It's like being branded a child molester - you'll never grow out of that reputation. Better flee the country, change your name, and get plastic surgery to reconstruct your face.
The seventh chapter in the book of debt relief
Chapter 7, known as straight bankruptcy, involves liquidating all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. Some property may be sold by a court-appointed official-a trustee-or turned over to creditors. You can receive a discharge of your debts under Chapter 7 only once every six years. This is a panicky sort of debt relief. It's waving the white flag, cowardly giving in, crying "Uncle!"
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities but eventually arrive you at total debt relief. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.
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