How Can A Bankruptcy Affect You?There are times in some people’s lives when life throws a curve ball and finances become overburdened and almost impossible to deal with. Credit card debt, automobile loans, mortgages and other miscellaneous debts begin to pile up.

The decision to file one of the bankruptcy chapters becomes a pressing issue in the mind. The decision to file a bankruptcy chapter 7, 11 or 13 should not be taken lightly. It is not a way out for an individual just looking to get away from paying obligations simply because they choose not to. It is a legal action that is undertaken and will remain on credit reports for years.

No matter how much we prepare for disasters it never seems to be quite enough.

Most people live from paycheck to paycheck and only make the minimum payments on their credit cards or loans.

When disaster strikes, such as unforeseen unemployment, many find themselves accumulating debt they cannot pay off.

The option of choosing a bankruptcy chapter becomes a pressing decision and one that can change lives.

Can Bankruptcy Be A Magical Cure?

It is remarkably easy to find yourself in debt. At age eighteen a person can begin acquiring credit cards and loans.

Before long they find themselves in a mire of revolving debt and not enough income to get ahead again. There are times when filing for one of the bankruptcy chapter options is the only option left to them.

It does not magically cure everything and can come back to haunt you for years.

What Are The Different Bankruptcy Chapter Options?

There is a distinctive difference in bankruptcy chapter 7, 11, and 13.

Bankruptcy laws have also changed within recent years so it is especially important to know which changes in law are the most applicable to the given situation.

A bankruptcy chapter, regardless of which one, is under the regulation of The United States Bankruptcy Courts and is governed by federal laws determining the rules and guidelines for each bankruptcy chapter.

Chapter 7 bankruptcy is where the individual is unable to pay anything towards his or her creditors.

The judge and attorney will compile a list of all debts owed and look at whether or not the individual will be able to pay them back the money that is owed.

If the person is not fiscally able to repay the debts then the assets not covered under exemption will be sold or returned and any extra monies paid to the creditors.

Chapter 11 bankruptcy and chapter 13 bankruptcy are where the debtor and his or her attorney makes arrangements through the court system to pay back the debts in monthly installments that will not overburden the individual.

There are some assets, such as retirement, that cannot be touched by creditors so this provides some measure of relief for those nearing retirement age who do not want their 401k or retirement saving plans wiped out.

Bankruptcy Can STOP Creditors Quickly

Bankruptcy chapter laws also prohibit certain types of behavior from creditors and collection agencies.

These vary slightly from state to state but are generally a list of rules and regulations that prevent collectors from harassing individuals. One provision in bankruptcy chapter laws prevents creditors, after bankruptcy proceedings have been initiated, to contact the individual again directly regarding the debt.

Other bankruptcy chapter laws might cover a debt collector making harassing or threatening statements to an individual, his or her friends and family. There are also laws protecting a person’s place of work from receiving phone calls if it jeopardizes their job.

Bankruptcy chapter laws, even while providing for a fresh start, can stop many of the more embarrassing and threatening aspect of debt collectors.

There are laws passed, though these vary from state to state, that cease the endless harassing letters and phone calls. The debtor can stop trying to fend off calls to their work or family once bankruptcy proceedings have begun.

Many debt collectors use shady or harassing tactics in order to collect a debt.

They get a percentage of the collection so they use any means necessary to coerce the debtor into paying.

Thankfully bankruptcy chapter laws have been passed to limit their ability and tactics used in collecting debts. Once the attorney has petitioned the court for bankruptcy, the collectors must go through legal channels.

Before Filing, Be Prepared To Stay Put

Bankruptcy is a serious action and must be considered carefully before jumping into it.

It will go onto credit records and can mean the difference in obtaining a place to rent, future auto loans and even obtaining certain jobs.

Even the differing bankruptcy chapter allowed under the law can affect credit differently. Anyone considering filing for bankruptcy should know all of the facts before proceeding.

All of the bankruptcy chapters leave a mark on credit reports. It is one decision that definitely should not be taken lightly.

Jobs, cars, bank accounts and even insurance premiums are all affected by bankruptcy. It will not be a permanent mark and there is a chance for a new life if valuable lessons are learned. Overspending must be curtailed and responsibility taken for bills, otherwise the vicious cycle can begin again.

Who Needs Credit Anyway?

The need for credit is all around us. It influences every part of our lives from purchasing a new house to obtaining a new job.

Those three numbers ranking our credit can make a huge difference in the quality of life. There is not a single bankruptcy chapter that does not leave some sort of black mark on that credit score. It is for this reason that bankruptcy attorneys instruct their clients to be informed and to be sure before they make that decision.

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