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Focus On The Positives Not The Negatives – Bankruptcy

Chapter 13 is the Federal Government’s version of debt consolidation. It’s filed in Bankruptcy Court and it works by shrinking all your bills into one payment (not just credit cards).

One such misconception or MYTH, can be summed up this way: That the debtor must be flat broke to file for bankruptcy. That is, that he shall have become financially depleted of any and every valuable thing he has, and shall have been impoverished to the point that he’s totally destitute and ruined, financially. In other words, that you have to get Bankrupt in order to file bankruptcy. In fact, it is not uncommon to find not only the ordinary man or woman in the street, but also the supposedly informed who would give you an argument that bankruptcy would mean the automatic loss or seizure of everything you own-your home, car, clothing, furniture, wages, computer, every dime, etc., etc.

Being successful in a bankruptcy filing is of utmost importance. An individual needs to focus on what they have and not on what they might lose. Living without credit is always tough on debtors, however, if you just make a few adjustments to your lifestyle things will get easier as the days go by.

A chapter 13 plan accepted by the bankruptcy court puts an immediate stop on any and all collection activity against you, such as an attempt to repossess your vehicle, wage garnishments, freezes on your bank account, and collection calls from creditors. Although Chapter 13 is not a loan, you do require an income to qualify for the monthly payment that you will tell the court you can afford.

Chapter 13 is very different from Chapter 7, otherwise known as “straight bankruptcy.” Chapter 7 bankruptcy does not require an income and is designed for individuals and families that can no longer afford their credit obligations.

The truth is, bankruptcy isn’t a magic bullet unless the debtor is willing to change their lifestyle and spending habits. Once again, going through bankruptcy is not all fun and you have to focus on what you are gaining from filing bankruptcy instead of from the standpoint, what you think you’re giving up.

If you’re seeking to file bankruptcy on your own because you can’t afford the attorney fees, you must ensure that you properly identify, not only all of your assets for your own protection, but also those assets fair market value so that it does not become a question of liquidation.

Keep in mind, bankruptcy is a tool that should serve to reset your financial picture and attorney fees should not work as a barrier between you and the protections of bankruptcy court.

Harris Smith runs the home equity line of credit website. Debt Consolidation and credit counseling can lower your monthly payments on credit card debt and other unsecured debts and loans.

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