Chapter 7 Bankruptcy: Is It Appropriate For Me?

Chapter 7 Bankruptcy: Is It Appropriate For Me? "If you are having significant difficulty making your monthly payments, you may want to consider filing for bankruptcy. You may have heard that bankruptcy is associated with severe credit problems and should be avoided at all costs. Although a bankruptcy will undoubtedly have repercussions on your credit score, it is often the case that by the time you are considering bankruptcy, you have already fallen so far behind on mortgage, vehicle loan, and credit card payments that a bankruptcy won't affect your score significantly further. And practically speaking, if you are or have been delinquent on car payments, credit card accounts, etc., you will likely have a higher credit score shortly after filing for bankruptcy than you do now.But what types and amounts of debt qualify an individual for Chapter 7 bankruptcy? If you have a small quantity of credit card debt, especially if you have only one or two creditors with whom a settlement may be possible, you may not need to file for bankruptcy. If you have six or more creditors with revolving debt, settlement with all of them is unlikely, and you may require harsher treatment, such as bankruptcy. If your credit card debt is still manageable, but your car payment has become unmanageable - perhaps due to a recent loss of income - bankruptcy may once again be a viable option. Large utility account (e.g., gas or electric) delinquencies, particularly when accompanied by shut-off notices, may render bankruptcy the only viable option.In addition, prospective or imminent foreclosure proceedings against your home may necessitate a more robust solution than debt consolidation or restructuring programs can provide. Chapter 7 bankruptcy may provide the ""breathing room"" necessary to apply for mortgage refinancing, modification, or hardship assistance programs. In addition to buying you the necessary time to pursue these alternatives, a discharge in Chapter 7 bankruptcy will eliminate the unsecured debts that so frequently siphon off essential disposable income, the loss of which has caused the inability to make mortgage payments in the first place.In conclusion, a Chapter 7 bankruptcy will provide a ""fresh start"" for honest debtors who are unable to keep up with their debts for any reason, including those mentioned above. Whether the benefits of bankruptcy outweigh the disadvantages is a calculation unique to each individual and circumstance. Obviously, this decision should only be made with the assistance and counsel of an experienced bankruptcy attorney, regardless of whether filing for bankruptcy is the best solution to your debt problem.
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