Deceptively Using Bankruptcy
to Repair Credit
In your effort to get solvent,
be on the alert for ads that offer seemingly quick fixes. While
the ads pitch the promise of debt relief, they rarely say that
their relief may be in the form of bankruptcy.
Although bankruptcy is one option to deal with financial
problems, it's generally considered the option of last resort because
of its long-term negative impact on your creditworthiness. A bankruptcy
stays on your credit report for ten years, and can hinder your
ability to get credit, a job, insurance, or even a place to live.
The truth is you can help yourself
to re-build a better credit record. Start by contacting your creditors
as soon as you realize you can't make the payments. If you need
help working out a payment plan and a budget, contact your local
credit counseling service. Also, check with your employer,
credit union or housing authority for no- or low-cost credit counseling
If none of these options is possible, bankruptcy
may be the likely alternative. In the U.S. there are two kinds
of personal bankruptcy: Chapter 13 and Chapter 7. The consequences
of bankruptcy are significant and require careful consideration.
Chapter 13, also know as a reorganization, allows
you to keep property, such as a mortgaged house or car, that you
otherwise might lose. Reorganization may allow you to pay off a
default during a period of three to five years, rather than surrender
Chapter 7, known as a straight bankruptcy, involves
liquidating all assets that are not exempt in your state. Exempt
property may include work-related tools and basic household furnishings.
Some property may be sold by a court-appointed official
or turned over to creditors. You can file for Chapter 7 only once
every six years. Both types of bankruptcy may get rid of unsecured
debts and stop foreclosures, repossessions, garnishments, utility
shut-offs, and debt collection activities.
Personal bankruptcy usually does not erase child support,
alimony, fines, taxes, and some student loan obligations.
Wells of Justice is a group of victims and victim advocates working
to inform the public on what they feel is a miscarriage of justice
operating through the U.S. Bankruptcy Court in Rockford, Illinois.
Visit their web site at www.wellsofjustice.com