Bankruptcy- What Are The Options
If you are considering Bankruptcy you have to know that it is not a one size fits all proposition. If you are dealing with credit card debt and other unsecured debt one of these options maybe just what you need.  Bankruptcy can be filed as a Chapter 7 or a Chapter 13.

If you are thinking that filing for bankruptcy will end all of your debt problems, you have been misinformed. Chapter 7 does not mean that all of your debt is wiped out. For credit card debt, however, bankruptcy can put you in the clear but at a cost to your future credit worthiness. When you file a Chapter 7 bankruptcy petition it comes with a high enough price tag. Generally all of your assets will have to be liquidated and an attempt made to satisfy the creditors. Your home may be exempt from this hast liquidation process under the Homestead Protection ACT.

When you file for bankruptcy you are literally signing your ability to get credit in the future away. When lenders see the word “Bankruptcy” in your credit history they understand it to mean that you are not a good risk. You are telling them all that you cannot be trusted to pay back what you borrow. When you want a new car loan or try to get mortgage after filing bankruptcy you will find it difficult if not down right impossible.

This is also the way it will be for you if you choose to file Chapter 13. This one is a bit different than Chapter 7 in that it is a restructuring process of the debts that you owe. It involves debt negotiations with creditors. The objective is to lower the amount of the debt by negotiating for better interest rates and waiving some of the fees. Then it is matter of designing a payment schedule to ensure that the money gets paid back.

In 2005 the government revamped the Code for Bankruptcy and added what they dubbed “the Means Test”.  A major part of the test is designed to determine if you have the means to pay back your creditors. Your income for a 6 month period of time, this is the months leading up to the filing. What they are looking for is an average income for that time period. Any source from which you receive cash on a regular basis is considered income.

The means test does not include money obtained through the Social Security Act. As for Unemployment compensation you may have to check locally to find out if your jurisdiction counts that as income. Bankruptcy is not a simple process and it is not always the best possible choice. You could easily contact a debt consolidation service such as, Debt Consolidation America, before taking that step. It is possible to negotiate with creditors and devise a payment plan that you and they can live with. Give us a call and let us help you to develop your plan of action. Living debt free could be closer than you think.