Among the many ways of dealing with debts when one is no longer able to service them or pay back is having them discharged by law. An individual is relieved of most of his debts-one may not need to repay them. This is what is referred to as chapter 7 bankruptcy. This is a good and very flexible option for those who do not have excess monthly income to offset the debts they have. However, there are some guidelines to be observed before one qualifies for this option.
Income is the basic determinant of a candidate for this kind of consideration. This kind of relief may not be for someone with an income enough for their needs and even with some extra to pay off some of the debts owed. The state will determine the amount one earns from six months income data. After some allowances are deducted, the remaining amount is gauged against the debts one has. If the state is convinced of the inability of the individual to offset the debts they have, most of their debts are discharged after complying with the procedures and requirements as the state may demand from you.
However, as it should have been noted, not all debts will be discharged. Among those that cannot be discharged are debts arising from divorce settlements or cases, recent taxes and student loans. Those most likely to be discharged include unsecured loans, medical bills and credit cards.
For some ten years after your debts are discharged, there may be some negative mark on your credit. However, ones credit grows with time and after the ten years, one’s credit will be higher as the mark disappears with time.
Chapter 7 does not totally erode your credit with the credit bureaus. Also, this method of protection from debts is like liquidation. The property or assets that are not exempted by law may have to be repossessed as they cannot be kept when seeking to have your debts discharged. This is not usually of great worry as more often than not the people seeking the discharge have very little if any property remaining. Other limitations include inability to cram down car loans and totally do away with unsecured mortgages. One cannot offset even the debts related to tax that have not been discharged.
It is true that this method of discharging one’s debts when they are unable to pay may have a number of disadvantages. However, it is very useful and can really be of help to one as a last resort. The advantages outweigh the disadvantages and at the end you are given a new lease of life financially to rise again. Before a final and well informed decision is undertaken, one needs real and honest information on the different ways they can be helped overcome debt, the kind that the Massachusetts Bankruptcy centre offers.