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Bankruptcy or Debt Settlement, Choose Wisely.
If you are considering Bankruptcy instead of a Debt Settlement Plan,.
make sure you are aware of the advantages and disadvantages of your
decision. If Bankruptcy is the only option for you,
then you should seek legal advice from a bankruptcy attorney.
The following information is not intended to be legal advice;
rather it is just an overview on the basics of the 2 most common
bankruptcy types.
There are 2 different types of bankruptcy that a client may
consider: Chapter 7 or Chapter 13. On October 17, 2005, the
bankruptcy code was revised by the “Bankruptcy Abuse Prevention
and Consumer Protection Act.” [BAPCPA] This revision was intended
to eliminate the option of Chapter 7 Bankruptcy for people who could
afford to repay some of their debts. Now, in order to qualify for
Chapter 7, a client’s expenses will be examined using the government’s
“means test” which was introduced as part of the 2005 revision to the
law. This test analyzes a client’s income and expenses using national
and local living standards, and the median income for the client’s state.
Chapter 7: “No asset” bankruptcy-You do not have to pay any portion
of your debts.
To qualify for a Chapter 7, first a client must obtain Consumer
Credit Counseling from an organization approved by the United States
Trustee’s office within 180 days of filing. The counseling is intended
to provide the client with alternatives to filing for bankruptcy.
A client must pass the “means test.” If a client has a certain
amount of disposable income left monthly, then they will not qualify
for Chapter 7 and will only qualify for Chapter 13.
Most bankruptcy attorneys require you to pay their fees up front
in full before they will process your bankruptcy. Fees vary by state.
A bankruptcy will remain on your credit report for up to ten (10) years.
Chapter 13: “Repayment Plan” bankruptcy – You must repay a portion
of your debts. Chapter 13's can be costly.
The court will analyze your income and expenses, and set the
client up on a repayment plan with their creditors typically for 3 to 5
years.
The bankruptcy Trustee monitors and administrates your
payment plan.
If you cannot file a chapter 7 bankruptcy, you may be much better
off entering a valid Debt Settlement Program administrated by a law firm.
The debt settlement program will not be listed on your credit report,
you will not need to be involved with the courts, and a chapter 13 is
really a quasi court ordered settlement program.
Additionally, You can regain your credit standing faster by avoiding a bankruptcy.
Bottom line: You need to get the facts. You can get a free
quote and consultation by contacting us at: American Debt Enders.
Wtitten By:
Steven Ciantro
Member National Association of Credit Counselors
American Debt Enders
help@americandebtenders.com
877-766-2465
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