Chapter 7 Personal Bankruptcy

Filing chapter 7 personal bankruptcy actions may be the only way that some people see to finally being rid of choking debt. The creditor letters come almost daily in the mail, the collectors call and harass at all hours of the day and for the debtor, there seems no other way out. For the borrower who has gotten so far into debt that the prospect of living another day under the strain is not worth contemplating, perhaps the time has come to pick up the phone and call an attorney to begin a chapter 7 personal bankruptcy action. For some people, wiping out debt without much conscience is intolerable and a chapter 13 filing may be more palatable. This action allows someone to set up a payment plan to repay all debts over time, but it does give relief to phone calls from collectors and garnishment of wages.

When considering any kind of bankruptcy proceedings, a debtor must first have had counseling from an approved court list of professionals. These sessions will cover areas of financial management as well as whether or this is really the best course of action for the debtor. Explorations may be made into the psychological effects of such action and ways to cope with such effects. This counseling must have occurred during the six months prior to filing the action. This counseling helps to mitigate sudden and perhaps hasty decisions being made regarding a chapter 7 personal bankruptcy action.

Before ever deciding to make such a drastic decision, there are actions that a person should consider as an alternative to a chapter 7 personal bankruptcy proceeding. The first option would be to seek out a credit counseling service. These services are both for profit and non-profit, and some are even faith based which may be able to help with even deeper issues that have actually brought about the credit crisis in the first place. Services are neither better nor worse if they are for profit or non-profit. These services can actually help reduce credit card and other debt by as much as fifty percent each month. These services try and work with creditors to craft a three to five year plan to pay off all high interest debt, but it takes a great deal of discipline on behalf of the debtor to not spend the extra money saved each month on unwise purchases. Another alternative to seeking a chapter 7 personal bankruptcy is to obtain a second job and use all the money made from that employment on debt reduction.

A debt consolidation loan may be available to try and put all outstanding accounts under one loan at a lower payment. This may especially be of interest to the homeowner who has substantial equity in his house. A home equity loan at much lower interest rates than credit cards can be a good way to getting a handle on a number of different payments. A home equity loan is given in return for a percentage of the homeowner's equity. This can be fifty to seventy percent of the home's equity. If this is not an option, a final action before bankruptcy should be the liquidating of assets. Often someone in a high debt situation has made a number of purchases that could be sold through auction, garage sale or other method that can then be used to help mitigate the debt.

The chapter 7 personal bankruptcy proceedings take about four months to complete and is costs about three hundred dollars for the actual filing fee. An attorney may cost in excess of several thousand dollars, but if the client can attend any legal proceedings without the barrister, that may be able to reduce some of the cost. The day that a filing takes place, creditors must stop contacting the debtor and any garnishment of wages will end. This kind of legal action does not wipe out the debtor's assets except for those on an approved list. If the reader is facing financial difficulty, know that God cares about the situation. "Behold the fowls of the air for they sow not, neither do they reap, nor gather into barns; yet your heavenly Father feedeth them. Are ye not much better than they?" (Matthew 6:26)

Finding discharge of overwhelming debt from taxes can be accomplished under certain situations in a chapter 7 personal bankruptcy proceeding. The due date for filing a tax return must be at least three years old, the tax return was filed at least two years ago, the tax assessment is at least two hundred and forty days old and the tax payer is not guilty of tax evasion. Recent tax returns and at least four other tax returns must be on file before discharge of tax liability may be granted. In addition, federal student loans are usually not allowed to be discharged in bankruptcy court. And any credit that is run up in contemplation of bankruptcy filing will not be available for discharge.

Making the decision to declare either chapter 7 personal bankruptcy or chapter 13 is a very serious matter. The stigma of such a proceeding does not leave a person's credit report for ten years. The ability to live above one's means is basically shut down meaning that luxuries are a thing of the past. Most Americans use credit to enjoy the amenities that really aren't within the normal budget, and credit is not on the chapter 13 menu for a decade. What may be most difficult for many is the realization that their credit promises were not kept and financial privileges offered in good faith were abased when chapter seven bankruptcy was declared.

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