For most of us, being faced with incredible debts means that we really want to run away from the problem. However, the problem does not simply disappear so finding an expert who can work through the problems is a good idea. A bankruptcy attorney is well placed to guide the affected person through the legal maze and come out the other side with little problems in between. A bankruptcy lawyer also knows any rules and regulations which pertain to the cases and could just find an answer to not losing everything that the affected person has worked for.
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Indeed, it is not always a good idea to rush into this kind of action since there could be ways out of debt that the person has not thought about. If the debts have a credit card element about them, they could be wiped out by the court if the person meets certain criteria. On the other hand, if he does not meet the criteria, repaying the debt could be made much simpler once the court has become involved.
Chapter 7 was introduced by the government to stop people losing everything and to help them get through the crisis brought on in no small part by the global economic downturn that we have all had to face. If the debt is all credit card based, the person will certainly be asked to undergo a means test where all the expenses of the family are scrutinized to see where the person is being wasteful. Only necessary expenses are allowed so it is not a good thing to have to go through. However, if the income of the family is less than the outgoings, then the credit card debt is cancelled out right there.
On the other hand, if the income is more than the outgoing payments, the person can file for Chapter 13 which means that his debts are amalgamated and a reasonable amount is paid each month for a set period of time. By going this route there is less impact on his credit rating and this should be good for any future purchases etc which require a good credit rating.
Although these options look as if they are favoring the debtor over the creditor, very often credit card companies charge extortionate interest rates and this is what gets people into some rather terrible problems. They give out cards like candy and people start getting more and more to pay off their existing debts without thinking through the whole deal.
The government brought in these measures because they realized that eventually they would have to mop up the mess. If more people had to claim assistance from the government because they had to give up their homes, the government itself would be left with the huge bill that would result from this action. By putting a penalty on the credit card companies, they have made them think more about how easy it is to give out cards to people who really cannot afford to pay back what they borrow.
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