When unsecured debt becomes unmanageable, Chapter 7 bankruptcy is often the only viable alternative. When a person only pays the minimum on a huge credit card bill, the principal will take years to pay off. The problem becomes intractable if the person loses their employment or accumulates large medical expenditures. The debtor is left with two options: chapter 7 bankruptcy Rancho or Chapter 13 bankruptcy. Which choice is the most suitable?
To begin, speak with a bankruptcy or debt relief professional to determine which option is best for you. What you are eligible for is determined by the size and extent of your debt.
In regards to Chapter chapter 7 bankruptcy Rancho:
When the debtor has minimal personal property and no liquid assets, this is a common strategy.
After paying for their essential living needs, the individual or couple has very little money left over.
The majority of unsecured debts are covered by chapter 7 bankruptcy Rancho and are totally discharged. Student loans backed by the government are an exception.
A person’s furnishings, automobile, and any other belongings required for a regular life can be kept. They could be able to keep their home or stay in it for a longer period of time.
It’s a quick procedure, and debts can be totally erased in as little as a couple of months.
During the time they are waiting to be discharged, creditors must stop communicating with one other. Harassing phone calls are no longer received.
A homeowner has a lot of equity in their property and wants to preserve it.
They are able to pay their living expenses, but they are unable to keep up with their other loan obligations.
A trustee or administrator is allowed to maintain the debtor’s house and personal belongings while the debts are spread out and distributed to creditors.
The debts are often allowed to be paid off over a three to five-year period, as supervised and monitored by the appointed trustee.
A single monthly payment is made to the trustee during the prolonged payback period. During this time, creditors are prohibited from communicating with the debtor in any way.
Chapters 7 and 13 are both listed on a person’s credit report for seven to ten years. This may appear to be a long time to be carrying a bag about.
This may appear to be a long time to have a negative mark on one’s credit history; however, when you consider the alternative – that a person with a $25,000 credit card balance who pays the minimum payments will take ten years or more to pay it off and will almost certainly miss payments along the way – bankruptcy is not a bad option.
Whoever files any chapter gets a new start. The Chapter 7 filer receives an immediate respite, while the Chapter 13 filer receives a revised payment plan, but both can begin restoring their credit right once.
A savings account at a bank or credit union can be opened with the money that has been freed up.
A skilled bankruptcy lawyer can assess who is qualified for Chapter 7 Rancho or Chapter 13, but the following are the main guidelines:
A person or couple must qualify for Chapter 7 by passing a means test that assesses their income to debt ratio. Prior to filing, they must get skilled credit counseling.
An attorney can assist a person in filing for bankruptcy protection under either chapter. Once a bankruptcy is filed, a debtor has a new sense of freedom that they would not have had for many years, if at all, if they had been battling with mounds of unsecured debt.
Is Chapter 7 bankruptcy preferable to Chapter 13 bankruptcy? Chapter 7 Ranchoprovides an immediate discharge, but Chapter 13 has a delayed discharge.
Choosing is an option, but let your attorney assist you in making the best decision.