A Chapter 7 bankruptcy
is commonly referred to as a "Straight Bankruptcy" in which the
debtor is allowed to completely discharge all of the unsecured debts and essentially
"start over." This is not all wine and roses, though, because you
are required to pretty much turn in everything of substantial value to the
trustee whom then uses those assets to satisfy the snarling creditors. From
the date of filing, creditors aren't allowed claim to income in which the
debtor makes.
This bankruptcy
is not designed for decent income generating individuals looking for an "easy
way out." It must be proven that there is no possible way you can pay
off the debts.
The Downsides:
Your credit will be negative for the next 7-10 years from discharge. This
will cost thousands in increased interest charges since you will be considered
a high risk customer. If you have any co-signers on the cards/loans then they
will still be responsible for the entire amount of outstanding debt. The costs
for filing a bankruptcy, depending upon the attorney and the state you live
in, can range anywhere from $800-$3000.
Bankruptcy Alternatives:
If you are not willing to take the risks of ruining your credit, you may do
well to research what other companies can do for you to help your debts. Two
major bankruptcy alternatives to seriously look into are Debt
Consolidation and Debt Negotiation.
