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Wednesday, August 28, 2013

Is Filing Bankruptcy Still Possible in 2013?



In today's tough economic climate many people are wondering, who can file bankruptcy? In 2012 alone, over 1.3 million Americans filed bankruptcy to eliminate debt. This number has declined since 2010 when it was over 1.6 million.

Basically, anyone can file bankruptcy but to be successful it depends heavily on their financial situation. It would be foolish for someone to use bankruptcy filing to eliminate their debt and only $1,000 in credit cards. This is a small amount of debt and unless circumstances are really extreme there would be no reason to use bankruptcy filing in this case. 
For smaller amounts of debt there are better solutions like debt settlement. A debt settlement will allow an individual to negotiate down the debt to a small portion of what is owed. Usually, creditors will accept 50% as payment in full and charge off the debt. The only problem with debt settlement is that it is not regulated. The individual is at the mercy of the creditor and sometimes the rules will change. There is no bankruptcy court with the judge that oversees the proceedings. It's basically a backyard deal and the individual needs to trust the company they hired and the creditors to not go back on the agreement.
If someone has a large amount of debt from credit cards, medical bills and personal loans, filing Chapter 7 bankruptcy is right up their alley. The only problem with this is, a person now needs to qualify to be able to file. In 2005 when the bankruptcy code changed, Congress added a means test to make those filing chapter 7 qualify to file. What it does is it takes the last six months income and averages it to get an annual median household income of that individual. This income will be compared to the median household income chart for their state and if they make too much money they'll be required to file Chapter 13 bankruptcy instead. 
So if you ask if filing bankruptcy is still possible for anyone? It's best to consult a bankruptcy attorney to see if it fits that individual's situation. The good news is, it's not as hard to qualify as most creditors would want an individual to believe. Creditors spend a lot of time and money to market the idea that filing bankruptcy will destroy your life. The one thing they leave out of the picture is that a person thay can't pay their bills already has their financial life upside down. 
The idea that someone's credit will be destroyed doesn't carry any merit when a person has years of late pays on their credit report. Today, filing bankruptcy is one of the fastest ways to eliminate a large amount of debt and get back on the road to becoming debt-free.
The author is a professional that formed FilingBankruptcyPros.Com which provides information for debtors considering filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy and helps individuals stop foreclosure and eliminate their debt by putting them in touch with a local bankruptcy attorney.

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