With the global economic downturn that everyone has been caught up in, it is inevitable that some people will be on the verge of financial collapse. Trying to pay off debts and keeping heads above water is probably what is on the minds of most people but when the inevitable happens then it is time to seek out expert help. Bankruptcy attorneys will have the experience to deal with these matters and will take it to the bankruptcy court to sort out the mess.
The first thing that most people think of is to get rid of any assets that they may have accumulated to pay off debts that they owe to perhaps several debtors. But this is not absolutely necessary since the law is very clear and what can be done in this kind of situation.
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For example, if the expert files for Chapter seven, then the expenses and income of the person in question is taken into account. Certain expenses, like rent or school fees for example, are allowed but anything that is considered unnecessary is not allowed. Gym membership or hair salon expenses for example would be classed as those kinds of things that most people can do without so they would not be included.
If the income generated is less than the list of expenses to be paid then the debt is written off completely and the debtor will not have to worry about this anymore. However, there is still help for those who have an excess of income over expenditure.
Chapter thirteen dictates that all the debts are amalgamated into one consolidated sum and a payment plan is worked out for the debtor. He may not necessarily have to pay for all of the debt since a fixed time will be worked out to repay a certain amount of money. After this, the debt is written off and the person can now be discharged.
Some good aspects of doing this kind of filing are that creditors are no longer allowed to harass the debtor once the case is filed. Even late fees and interest charges are no longer added to the debt since the sum has become fixed after filing. Of course, it does mean that the individual will be means tested and this can be a little demeaning to say the least.
Indeed, many people would shy away from any kinds of means test since they will have to reveal all kinds of information that they may deem to be very private. However, this is really the only route out of the debt trap so some just bite the bullet and get on with it.
Another aspect to this kind of filing is that the person will probably now get a very bad credit rating since the case will be on file for all to see. In this day and age when everyone depends on credit so much, this may just curb the life of the person to some extent which may not be a bad thing!
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