In the recent years, many Americans have come to the conclusion that the debt they incurred over the last decade will be next to impossible to ever pay off outside of winning the lottery. Historically, when someone thinks of filing bankruptcy, they think of Chapter 7. This is because Chapter 7 bankruptcy does not have any kind of repayment required and wipes out the debt with the bankruptcy discharge. In the past, bankruptcy carried a stigma of failure or dishonesty. Many people believed that individuals that didn't pay their debt were either losers or dishonest. While this stigma is far from the truth, no one could foresee what happened in 2007 when the real estate bubble burst and the financial markets came close to collapse. After this happened, bankruptcy filing quickly became mainstream and no longer carried the stigma of the past.
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Many experts believe that the stigma that was created about those filing bankruptcy was probably perpetrated by the credit industry. Debt collection companies and creditors alike, spend a lot of time trying to discredit the reasons of why to file for bankruptcy. They know that if a person talks to a bankruptcy attorney and decides to file Chapter 7 bankruptcy, all bets are off and they will receive nothing in the end. Because of this, they lie and deceive debtors to continue receiving payments from individuals.
The United States is currently having a debt crisis. Not only is the financial crisis happening at the government level, it is also happening nationwide to consumers. The average American, as of the end of 2011, had $16,000 in credit card debt. I'm sure that number is much higher now, but the new numbers have not been released yet. People need to protect their assets they currently have and if that means filing Chapter 7 bankruptcy, so be it.
When considering filing Chapter 7 bankruptcy, a person needs to weigh the positives versus the negatives for their current situation. Creditors say that Chapter 7 will destroy one's credit. The truth is, it does leave a scarlet B on one's credit report, but when you consider what this same person's credit looks like currently, it probably won't cause much more damage. Since the credit report is based on ability to pay and debt ratios, some individual's credit will go up with the discharge of all the debt. The idea that a person post bankruptcy filing will never receive credit again is crazy. Creditors are opportunists and realize that many people post bankruptcy filing are virtually debt-free. As long as they maintain employment, they start looking like a pretty good risk for creditors. Initially, credit will come at a price and that's why a person should wait a few years to apply for credit for better rates and lower fees.
Filing Chapter 7 has become much more complicated since the changes to the bankruptcy code and should be done with the help of a bankruptcy attorney. For those that complain about the cost of filing, they should take a look at the amount of debt that is being wiped out in the bankruptcy filing and compare it to the cost of a bankruptcy attorney and filing fees and all of a sudden the value will be apparent. During these tough economic times Americans need to be proactive when it comes to financial matters and not bury their heads in the sand. There are no longer any guarantees of employment and return on investments that's why people should make their financial decisions based on the here and now and not a guess.
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