If the consumer qualifies, Chapter 7 can leave devastating effects on their credit score that will stay for the next 7-10 years. The consumer’s credit can go down 200 points - which can take some time to recover from.
Dallas, TX (PRWEB) June 27, 2013
National Debt Relief, the leading debt settlement company in the country, published an article that intends to provide a warning to consumers who are planning to file a petition for bankruptcy. The article was published last June 11 on the website of the BBB (Better Business Bureau) accredited company. Entitled “Ready To File For Bankruptcy? Better Read This First,” the article tackled various issues that make bankruptcy a dreaded work in the financial industry.
The article claims that financial gurus refer to bankruptcy as the “nuclear” option because of its ability to help consumers eliminate their debt and allow a fresh start. According to the article, there are two types of bankruptcies that the consumer can file: Chapter 7 and Chapter 13. Of the two, it is the former that is more like a nuclear bomb.
In Chapter 7, the article reveals that it liquidates the assets of the consumer to help pay off debt. In Chapter 13, the debts are “reorganized” so the consumer is given time to fix their finances and pay off their creditors.
The thing about Chapter 7 being referred to as nuclear is the fact that the assets of the consumer can be leveled out - just like how a bomb levels towns. The court will order the assets of the consumer to be liquidated. This means it will be sold and the money from the sale will go to creditors. As discouraging as that may sound, there are exemptions to the rule that can protect certain assets - most of which depend on the value of the particular possession. The article cites an example wherein a petitioner can file to exempt $10,000 of the home equity. This varies depending on the state that the consumer filed in. Cars can also be exempt but it depends on the value of the vehicle.
National Debt Relief warns consumers that usually, they are not protected from lenders of secured debts. Whatever the collateral is will be repossessed by the creditor or lender. There are also unsecured loans that cannot be discharged by the bankruptcy court. That includes student debt, child support, tax debt and alimony.
The debt relief company also tells readers that there is also the possibility that they will not qualify for Chapter 7. This means they could land in a Chapter 13 bankruptcy wherein they will still be subjected to a repayment plan.
But if the consumer qualifies, Chapter 7 can leave devastating effects on their credit score that will stay for the next 7-10 years. The consumer’s credit can go down 200 points - which can take some time to recover from.
After pointing out all these details about bankruptcy, National Debt Relief believes that consumers must think long and hard before they file for bankruptcy. Although this debt relief option has advantages and disadvantages, there may be better programs that will not leave so much devastation in the financial records of the consumer.
To read the whole article, visit the website of National Debt Relief. With years of experience helping over thousands of consumers they are clearly an authority in the debt relief industry. The company was recently proclaimed by TopConsumerReviews.com and TopTenReviews.com as the number one debt relief company in the country.