Every year many people get roped into New Year’s resolutions, promising to change something in their life. With Christmas just passing, what could be better than getting out of debt? One quick solution to becoming debt-free is a bankruptcy filing. If you’re interested, there is an easy test to see if this could be in your future. Do you owe more money today than you did yesterday, because of snowballing interest? If you answered yes to this question maybe you can qualify for a government bailout. If you’re realistic you know that’s not going to happen. The government didn’t set aside any TARP money for individuals that got caught up in credit card debt. Instead, they are bailing out banks and airlines and car companies that overspent on employee pensions, and giving big bonuses to executives. The only way Americans can give themselves their own stimulus package is by filing bankruptcy. An individual can discharge just about all of their debt in a personal bankruptcy. Chapter 7 bankruptcy will wipe out your credit card debt, giving you extra money for your living expenses and necessities. Personal bankruptcy will get the creditors off your back, allowing you to get a fresh start. If big corporations can file for bankruptcy and it works for them, it should work for you also.
Chapter 7 is the most common type of filing and is what most people think of when they hear the word bankruptcy. It’s also known as a straight bankruptcy, allowing a debtor to discharge all unsecured debts. Credit cards and medical bills are the most common type of unsecured debts. Student loans usually cannot be discharged unless there is a severe financial hardship. To have a student loan discharged, a bankruptcy attorney would have to file a motion with the court showing proof of financial hardship and how the individual, because of their situation, would never be able to pay it back. Most people in severe debt qualify for Chapter 7. The only reason someone wouldn’t qualify is because their income is too high for the area they live in based on the “Means Test.” When an individual fails the means test they will be pushed into a Chapter 13 bankruptcy which sets up a payment plan to pay back debt over a 3 to 5 year plan. Secured debts are paid first, and at the end of the payment plan, any leftover unsecured debts that could not be paid in that timeframe will be discharged. Chapter 13 can be a good thing for individuals that are trying to keep a home by allowing them to catch up on back payments and eliminating some of their unsecured debts.
If personal bankruptcy is the economic stimulus package you need, don’t stress out about everyone finding out. Most people think because it is public record all of their friends and families will know. The only way someone will find out is if you told them. The only other way a family member or friend or boss could find out, is if they are a creditor and are notified from the court. It would be good advice to call someone close to you and discuss the situation, even possibly offering to pay them to save face, instead of being notified in the mail that you are filing bankruptcy on the debt you owe them. If personal bankruptcy sounds like a solution for you, contact a bankruptcy attorney to discuss your options.