AZ Arizona Business Blog

If you already have mountains of debt accumulated, it might be too late for good financial advice. Before you decide to file bankruptcy, first try other measures such as slashing your budget to a minimum and making a written arrangement to pay all you owe by certain dates. Also you might try going to a credit counselor who will consolidate your debt and pay it on your behalf. Another option is to call your creditors and see if they will agree to some kind of debt settlement where you can offer to pay only a percentage of what is owed. The one thing bad with this option is that it is almost as bad as filing bankruptcy on your credit rating. If you have exhausted all those measures and any others that may work, and you are still in trouble, then the only thing left for you is to file bankruptcy. This is the fairest way for you and all your creditors.

A chapter 7 or 13 bankruptcy is a legal process in which an individual or married couple asks the government to help them pay the debts they can’t pay and forgive the rest. You must first file a bankruptcy petition with the court in which you outlined all of your financial assets and debts. Then, after a mandatory credit counseling session, you will file bankruptcy. The court will issue an automatic stay against your creditors, then appoint a trustee, an impartial person who decides how  and how much debt to pay off. You will then either make payments or sell off valuable assets, certain assets, usually including your home equity and retirement account, are untouchable under the law. At the end of the process, the remaining debt will be discharged and you will start with a clean slate. A bankruptcy filing will remain on your credit for 7 to 10 years, but you will be debt free, no creditors and a chance to have a fresh start.

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