Sometimes debt is such a slippery slope that it can be hard to keep your head above water.
In such cases of extreme financial difficulty it might be worth considering the option of bankruptcy, indeed when life gives you lemons it’s important you try your best to turn it into lemonade, and whilst bankruptcy might not seem like a great drink to have to swallow it can be a way to get a clean slate and start afresh.
The social stigma once associated with bankruptcy is nowadays much less potent as today’s entrepreneurial culture that has seen many highly successful business people go bankrupt multiple times… only to rise up again like a phoenix. Therefore, more and more people are considering bankruptcy as an option to get out of debt.
WHAT IS CHAPTER 7 BANKRUPTCY?
This method of going bankrupt will normally result in most of your debt being discharged, meaning you won’t need to repay what you owe – however, some (or maybe even all) of your assets may be collected and liquidated in or to settle the outstanding debt.
HOW MUCH DOES BANKRUPTCY COST?
Many people claiming bankruptcy are not in the financial position to afford legal fees, but at the same time, the support and advice of having an attorney handle your case can be worth every penny.
HOW LONG WILL IT TAKE?
A simple chapter 7 bankruptcy will take around three months to complete, but for many people four to six months is an average timeline for the case to be completed.
ELIGIBILITY FOR GOING BANKRUPT
Eligibility for chapter 7 bankruptcy proceedings are based on a variety of factors including income and whether you have filed bankruptcy in the past. The most significant stumbling block is whether the court considers you did not file your case in good faith, as this way, you might not be able to obtain a discharge from bankruptcy; an example of bad faith would be to conceal assets or misstate your income.
THE MAIN BENEFIT OF GOING BANKRUPT
In addition to the obvious benefit of no longer having responsibility for the debt you owe, chapter 7 bankruptcy will provide an injunction that stops creditors from collection activities including wage garnishments and lawsuits. Essentially, this means that a lot of the stress is put on hold – as the credits cannot go after your home or car without authority from the court. It means that all the stress and hassle of being pursued by creditors will stop.
GOING TO COURT
The idea of going to court might seem a scary prospect, yet, for most people the meeting in court will take only 5-10 minutes. The appointment is known as a “meeting of creditors” where you will meet with the trustee to discuss your case. You will then normally receive a discharge in around sixty days.
WHAT IS A DISCHARGE?
Once the bankruptcy process is complete the court will discharge you from the responsibility of your debt; meaning, in law, you no longer owe the amount you owe – the debt is essentially written off, and wiped clean.
There are however, certain types of debt that can’t be discharged in bankruptcy such as student loans and tax debt. The other aspect to consider is that if a creditor complains of bad faith (e.g. let’s say you obtained the credit fraudulently) then the Court is unlikely to discharge you of your responsibility for that particular debt.