It is a sad state of affairs but many people these days are ending up severely in debt with nowhere to turn but the courts. When debt becomes too much, they often just want to run away and not deal with the problem at all. However, there is help at hand with a bankruptcy lawyer who will be able to guide the uninitiated through any problems that may be encountered. Indeed, bankruptcy attorneys will certainly know how to deal with any problems that a debtor has and may just be able to get some of the debt wiped out as well.
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The problem with debt today is that a lot of people use things like credit cards to live way beyond their means. They then only pay off the minimum amount off the balance each month so that the credit charges are exceptionally high over the course of the repayments.
The other mistake that people make is to start getting other credit cards to pay off the originals. This just goes on to compound one problem with yet another. But the government noticed that this problem was not only the fault of the consumer, it was also the fault of the credit card companies who were handing out cards without a second thought.
What happens now, if the debt is made up of mostly credit card debt, is that the court will ask for a kind of means test. This is demeaning for anyone who has been taking care of themselves all along, but it does offer some hope at least.
Some expenses that are deemed to be absolutely necessary are included in a list. Then this is compared to the incoming amounts and if the incoming is less than the necessary expenses, the credit card debt is expunged immediately. The credit card company has no recourse to this and the debt is no more. This is called applying for Chapter 7.
With the same routine, and where the incoming is greater than the necessary expenses, all the debt is consolidated into one lump. Then a repayment plan is worked out and must be adhered to. This is called Chapter 13. What this does though is to stop all forms of harassment including letters and phone calls. It also stops any further interest charges or late payment penalties from being added to the existing debt.
Although this may look like an easy way out for those people who have gotten themselves into debt, it really is a demeaning procedure. Also, some parts of this procedure actually bring down their credit ratings so they will be unlikely to get another credit card in the near future. Since most of us do not like to carry cash around with us, this could make life too difficult to work with.
Of course, the government realized that it would have to help anyone who had to give up their homes so it brought in this kind of answer to not only make people stay in their own homes, but to admonish credit card companies who did not take care when giving out cards in the first place.
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