Indeed, it is not always a good idea to hurry into this kind of action, as the individual may not have considered all of their options. If the debts have a credit card component, they may be discharged by the court if the individual satisfies certain criteria. Alternatively, if he does not fulfill the criteria, the court's involvement could make it much easier for him to repay the debt.
Chapter 7 was enacted by the government to prevent people from losing everything and to assist them in surviving the crisis brought on by the global economic downturn that we have all had to endure. If all of the debt is from credit cards, the individual will be required to undertake a means test in which all of the family's expenses are evaluated to determine where the individual is being wasteful. Only necessary expenses are permitted, so it is not a pleasant experience. However, if the family's income is less than its expenses, the credit card debt is immediately canceled.
Alternatively, if the income exceeds the outgoing payments, the individual can file for Chapter 13, which means his debts are consolidated and a reasonable amount is paid each month for a specified period of time. This decision will have less of an impact on his credit rating, which should be advantageous for any future purchases that require a high credit rating.
Although these options appear to favor the debtor over the creditor, credit card companies frequently charge exorbitant interest rates, and this is what puts people into rather dire situations. They hand out credit cards like confectionery, and people begin acquiring more and more to pay off their existing debts without considering the entire transaction.
The government enacted these measures after realizing they would ultimately have to clean up the mess. If more people had to claim government assistance because they were forced to abandon their homes, the government would be saddled with a massive cost. By imposing a penalty on credit card companies, they have caused them to reconsider how readily they issue cards to individuals who cannot afford to repay what they borrow.
" - https://www.affordablecebu.com/
