Those with substantial credit card obligations do not need to file for bankruptcy today. As long as certain conditions are met, Chapter 7 bankruptcy allows the debtor to keep some of his property and completely eliminates his credit card debt.
First, the court will conduct a means test and determine what expenses are regarded reasonable and necessary. Then, if the individual has no additional income, the credit card debt will be completely canceled out. This is known as Chapter 7 petition.
In the event that revenues exceed expenditures, the court will devise a payment plan. This is a Chapter 13 petition, and the individual will still benefit because he will no longer be pursued by his creditors. In addition, he will no longer incur excess credit charges or late payment fees. Typically, the court totals the individual's debts and divides the total amount into manageable installments.
This type of procedure is advantageous because the individual does not lose everything they have labored for. Nor does he have creditors or bailiffs embarrassing him in front of his family and neighbors by unexpectedly visiting his home.
Some individuals would attempt to negotiate a payment plan with creditors beforehand, but creditors would understandably be unwilling to accept anything other than entire and on-time payments. Court intervention will alleviate some of the burden, and although it is unwelcome, it is a good method to resolve the issue.
Some individuals may believe that the debtor is being let off too readily. Some may even believe that erasing the debt is detrimental to the creditors, but the courts have determined that this is the best method to assist those who are experiencing a credit crunch. They can only apply for this type of assistance once every eight years, so it is certainly not a simple way out.
When debt is a problem, it is necessary to involve a professional in order to save the day. Those who have contemplated fleeing away or doing something much worse may find that the only way out of the quagmire is to confront it with a professional in charge.
Obviously, the ideal course of action is to avoid incurring debt in the first place. However, due to the ""have it all now"" mentality that pervades modern society, this issue will not go away anytime soon.
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