Many people these days that are struggling financially have considered filing bankruptcy. One of the first things that they should do is to really take a good look at their situation and see if there are other alternatives to bankruptcy that may work. Filing bankruptcy has many benefits but it also carries some negatives as well. The biggest and most obvious negative is that it ruins your credit. However, many people that are at the end of their financial rope already have extremely bad credit due to numerous late pays and delinquencies at this point. For these people filing bankruptcy can help them improve their credit over time. For someone that has a large amount of unsecured debt, filing Chapter 7 bankruptcy will eliminate it all. In fact, some lucky individuals might even end up being debt free or close to it. The creditors still don’t want consumers to know that filing bankruptcy is a feasible way of getting your financial life back on track. This is the exact reason that the legal process was created. Looking at the bigger picture capitalism would not work. Entrepreneurs would not bring their inventions to market if they didn’t have a way out.
In 2005, the bankruptcy code had a major overhaul. One of the requirements that was added to the code was that all individuals filing bankruptcy must take a credit counseling course as well as a financial management course. This addition to bankruptcy is intended to help people to understand how to manage their money so that they will not make the same mistakes that put them into bankruptcy in the first place. These courses teach people not only the basics of the bankruptcy process, but responsible budgeting, proper use of credit, and money management tips that are invaluable. Learning how to keep track of a monthly budget according to how much monthly income versus the necessary expenses will help individuals stay on track and not overspend on extras. Any extra money can be put into savings for emergencies. Learning these simple but necessary techniques that these bankruptcy courses teach can put debtors back on the road to financial recovery and avoid future pitfalls that got them into financial distress in the first place.
Overall, filing bankruptcy is not as painful as creditors would like everyone to believe. A Chapter 7 can be completed in 4 to 6 months with the individual leaving debt free from all unsecured debt. With a new complexity added from the bankruptcy code changes it is best to consult a bankruptcy attorney to learn the ins and outs and how it will affect the individual’s financial situation.