Every year, many people engage in New Year’s resolutions, promising to change something in their life. With Christmas fast approaching, what could be better than getting out of debt? A quick fix to become debt free is to file for bankruptcy. If you’re interested, there’s an easy test to see if this could be in your future. Do you owe more money today than yesterday, due to rising interest? If you answered yes to this question, you may qualify for a government bailout. If you’re realistic, you know that’s not going to happen. The government did not set aside TARP money for people who got stuck in credit card debt. Instead, they are bailing out banks, airlines and auto companies that overspent on employee pensions, and handing out big bonuses to executives. The only way Americans can give themselves their own stimulus package is to file for bankruptcy. An individual can discharge almost all of his debt in a personal bankruptcy. Chapter 7 bankruptcy will eliminate his credit card debt, giving you extra money for his expenses and needs. Personal bankruptcy will get your creditors off your back, allowing you to start over. If large corporations can file for bankruptcy and it works for them, it should work for you too.
Chapter 7 is the most common type of filing and is what most people think of when they hear the word bankruptcy. It is also known as direct bankruptcy, which allows the debtor to discharge all unsecured debts. Credit cards and medical bills are the most common type of unsecured debt. Student loans generally cannot be canceled unless there is serious financial hardship. To cancel a student loan, a bankruptcy attorney would need to file a motion with the court showing proof of financial hardship and how the individual, due to her situation, will never be able to repay it. Most people with severe debt qualify for Chapter 7. The only reason someone would not qualify is because their income is too high for the area they live in based on the “Means Test.” When an individual does not pass the means test, he will be pushed into a Chapter 13 bankruptcy which sets up a repayment plan to pay off the debt in a 3 to 5 year plan. Secured debts are paid off first, and any remaining unsecured debts that could not be paid within that time will be paid off at the end of the payment plan. Chapter 13 can be good for people who are trying to keep a home by allowing them to catch up on missed payments and eliminate some of their unsecured debt.
If personal bankruptcy is the stimulus package you need, don’t worry about letting everyone know about it. Most people think that because it’s public record, all their friends and family will know about it. The only way someone will find out is if you told them. The only other way a family member, friend, or boss could find out is if they are a creditor and receive a notice from the court. It would be good advice to call someone close to you and discuss the situation, possibly even offering to pay them to save face, rather than receiving a notice in the mail that you are filing for bankruptcy on the debt you owe them. If personal bankruptcy sounds like a solution for you, contact a bankruptcy attorney to discuss your options.
