In the ongoing economic downturn, many people will find themselves drowning in debts which they find hard to pay. In years gone by they would have lost everything but these days, a bankruptcy attorney will do his best to salvage the homeowner from this sticky situation. Bankruptcy lawyers will have all the necessary information to help the distressed person to at least keep something.
These days, those with huge credit card debts do not have to go into insolvency proceedings. There is Chapter 7 which will allow the person to hang on to some of his belongings and literally wipe out the credit card debt as long as some criteria are met.
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First, the court will do a means test on the person and work out what expenses would be considered to be normal and necessary. Then, if the person does not have excess income over this, the credit card debt will be wiped out completely. This is called filing for Chapter 7.
Should there be an excess of income over expenditure, the court will work out a payment plan. This is filing for Chapter 13 and will still benefit the person because he will no longer be pursued by the creditor. Indeed, he will also no longer be hit with excess credit charges or late payment fees either. The court normally adds all the debts together and splits the whole into regular and easy payments for the person to adhere to.
The great thing about this type of procedure is that the person does not lose everything that they have worked for. Neither does he have creditors or bailiffs calling unannounced at his house to embarrass him in front of family and neighbors.
Some people would try to talk to the creditors beforehand and work out a payment plan but creditors understandably would be loathe to agree to anything but the full payments and on time. Going through the court will ease the burden somewhat and although it is not welcomed, it is a good way to solve the problem.
Some people may think that this is letting off the debtor too easily. Some would even think that wiping off the debt is not good for the creditors, but this is the way that the courts have seen fit to help those who are suffering from the credit crunch. They can only apply for this kind of help once every eight years so it is not an easy way out for sure.
One thing that is necessary is that a professional is involved, whenever debt is an issue, to save the day. For those who have contemplated running away, or something much worse facing it with a professional in control is perhaps the only way to come out of the quagmire with any kind of resolution.
Of course, the best idea is not to get into any kind of debt in the first place. But with the, "have it all now," attitude that most of us have these days, this problem will not go away just yet.
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