Chapter 7: How It Can Help You Get Out of Debt

We live in a society that values consumerism above all else. Though part of the blame lies on the media and part of it lies elsewhere, the bulk of it lies squarely with our system of economics. Capitalism works because people like to spend money, and our entire economic system is built on that premise. Of course, this doesn't mean you have to go into debt to be a part of society, but imagine what would happen to our economy if everyone went on a cash-only system. The real estate market would collapse in a day. As would, of course, the credit card industry and most of the banks. Debt is a part of being an American. Unfortunately, while this system has its upsides, many people have strongly felt the downsides as well.

If you are someone who has overextended their debt, perhaps through no fault of your own (personal economic circumstances have certainly been known to change in an instant), you may need the government's help in the form of Chapter 7 bankruptcy. This filing has helped millions of debtors find a light at the end of the tunnel. If successful, it can result in the discharge of many forms of debt and give the individual a fair chance to get back on solid ground. The idea behind the concept involves allowing a trustee to take possession of the debtor's property and distribute it among those who are owed money. The loophole, of course, is that much of this property is exempt, allowing many people to walk away from the discharge free and clear.

If you're being consistently harassed by creditors, filing for Chapter 7 bankruptcy can bring this harassment to a quick end. Once the filing has been made, the creditors listed are given notice that they are to take no further action as it pertains to collecting the debt. They can no longer send letters or make phone calls and they cannot file a suit against the debtor. This can be a major relief for those who find themselves hounded day and night for their payments. This notice is good until a judge decides on whether or not to grant a discharge to the debtor. If he does, the stay will turn permanent. If not, the creditors will again be allowed to pursue their money.

As you might know, however, not every form of debt is eligible to be discharged through Chapter 7 bankruptcy. It is important to speak with a qualified attorney to determine exactly what can and cannot be discharged or even included in the filing. This is where many people make a mistake and as a result, find themselves further and further behind on their financial obligations. Taxes, child support, and student loans are among the debts a court will not discharge even if a bankruptcy goes through.