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Despair is the best way to describe it. Despair that you cannot answer the phone for fear that it is a creditor calling. Despair that you cannot open your mailbox for fear that it is loaded with money requests from creditors. Despair that every time you send in the last chunk of your paycheck, it only forestalls the hungry vultures from descending to tear at your guts. You cannot take this anymore. You need to escape.
Debt plagues millions of Americans. It starts out with a couple thousand in credit card debt, a mortgage payment, and a car loan. Generally, something tragic follows. You or a loved one suffers a medical emergency or you are laid off. The bills stack up with little source of income. You charge more and more, without a means to pay off the interest, so it just keeps compounding until the debt becomes unmanageable. Even the staunchest budget, with no savings and only peanut butter and jelly, cannot rescue you. This means you should look to your last resort: Bankruptcy. Be sure to take this road only if solutions to avoid bankruptcy can't help you either!
There are several different types of bankruptcy, but the bankruptcy that probably applies to you will be either Chapter 7, Title 11 or Chapter 13, Title 11 bankruptcy. You may have heard a little about bankruptcy, you may have even studied bankruptcy when you were in consumers end, but the thought that you would ever need to file for bankruptcy was so far and away that you did not pay attention except to hear of the terrors. Yes, it is a last resort, but it is not the end of your life. For many, it provides a relief from despair and a second chance at life.
Chapter 7 bankruptcy is the type that most people know about already. Essentially, any non-exemptable property is liquidated to pay creditors and debt is sworn off, except for certain exceptions. Generally, most of your property is probably already exemptable, such as clothing, household items, and old cars. You generally do not have to give up your house. There are some types of debt you cannot lose, like child support, student loans, and some taxes. This type of bankruptcy, also known as straight bankruptcy, contains tests for abuses such as the "means test" and it will stay on your credit score for 10 years. This will impede your ability to take out loans.
The less commonly known type of bankruptcy is Chapter 13, which is a restructuring of debt for people with regular income. This lets you pay off your debt for three to five years and allows you to keep all of your property, as well as giving you a greater amount of controls. After you complete your payment plan, then the court will release you from the rest of your debt. Chapter 13 stays on your credit score for 7 years as opposed to 10 years.
Both types of bankruptcy can cause your credit score to tank, but chances are your credit score is already in the toilet. With the help of tesma.net, you can help determine if bankruptcy is the next step for you, or if you can find some other manageable way to climb back out of the pit of debt. Research your options carefully, and check to see if bankruptcy is the route for you.
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