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Chapter 7: A Fresh Start

The thought of filing for bankruptcy strikes fear into the hearts of most people who have to consider it. However, if you are drowning in debt and can see no farther than the next pile of bills or calls from your creditors, it can be a real life-saver. Many people do not realize that bankruptcy is their legal right, and the government offers it as a way for people to get a fresh start in life. Chapter 7 is the most common type of personal bankruptcy. It provides a way to wipe out all qualified debt. This can mean a brighter future for you if you qualify to take advantage of it.

Each state has its own regulations regarding eligibility to qualify for chapter 7 bankruptcy. Some require debt counseling, and others require proof that you will be able to manage any future debt. But the biggest qualifying factor for chapter 7 is that you must owe more money than you are worth. This is called being “upside down” in your finances. In these cases, bankruptcy is often the only choice left if you wish to repair your financial future as well as your life.

You can file for bankruptcy on your own, but it is wise to hire an experienced bankruptcy attorney. There are fees involved in hiring a private attorney, but his knowledge and experience will be well worth the money spent. If you cannot afford to pay the attorney fees upfront, look for one who will allow you to make a payment plan. These attorneys are experienced with people who are struggling and will often offer some leniency in paying their retainer fee.

At your first appointment with your attorney, you will bring copies of any debts, bills or other obligations, along with pay stubs and proof of other sources of income. He will go over your financial situation with you, and take the necessary steps to see if you qualify to file for bankruptcy. In some states, you may need to take a means test or fulfill other requirements in order to determine whether or not you qualify.

The great thing about hiring an attorney is that you do not have to worry about making mistakes or omitting important steps in the filing process. Once you are qualified to file for bankruptcy, the attorney will do all the paperwork as well as oversee the filing process. You may need to make a court appearance, but the legal work will be accomplished by the attorney.

If you have secured debt, such as a home mortgage or automobile loan, you must either sell them, keep up the payments or negotiate a new payment plan. Many mortgage companies offer loan modifications for people who have filed for bankruptcy. Auto loans can also be modified to allow for lower payments for a longer term. These options are decided by the individual creditor. However, your attorney can help in the negotiating process. By negotiating this way, you may be allowed to keep your home and other important assets.

In many states, people who file for personal bankruptcy are required to complete a financial education course. This may seem tedious, but it is a way to educate people regarding the proper ways to manage their finances. This can help you to avoid financial problems in the future. And, there are limits as to how often you can file for bankruptcy. Depending on the state in which you live, you may not be able to re-file for up to ten years. So, this education can offer you valuable information toward staying debt-free.

After your chapter 7 bankruptcy has been discharged, you will have a clean slate to start over on. But, even though you will have a sense of freedom, bankruptcy is only the first step in becoming financially responsible. If you work hard, and learn to successfully manage your money, you will be able to take advantage of this “fresh start,” and create a better future for yourself!

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