When people talk about becoming debt-free rarely does filing for bankruptcy come up in the conversation. Most people don’t realize that if an individual has the help of a bankruptcy attorney and uses the power of Chapter 7 bankruptcy to its full extent, many times they can emerge after the discharge being virtually debt-free. This is another reason why it’s important to find a bankruptcy attorney that knows the law inside out. To come out being debt-free out of bankruptcy there are a couple major decisions the debtor will have to consider. First of all, the debtor will need to surrender any secured property in the bankruptcy filing. Usually, a bankruptcy attorney will have a serious heart to heart with a debtor filing Chapter 7 about the importance of hanging on to property that the debtor might owe more money on than the property is worth. When filing Chapter 7 bankruptcy, this is the time to let it go. The bankruptcy discharge will wipe out any deficiency, fees and additional charges that might arise if the debtor decided to let it go after the bankruptcy filing. If the property is surrendered in the bankruptcy, the debtor will no longer have any liability towards that property. Many people filing for bankruptcy want to keep their automobile, which in many cases, they can’t afford. Ask any bankruptcy attorney and they can give you a list of stories of how the debtor hung on to the car they were upside down on, only to give it back after the bankruptcy. Because of the timing, there is no way to do anything and they are on the hook for the entire amount owed to the creditor.
Another situation is with a mortgage. It’s true that a family needs a place to live even though they’re filing for bankruptcy. But once again, this is the time to do soul-searching and decide whether the house is a doable proposition or is it going to be an albatross down the road. The way the real estate market is currently, it might be a good idea to let it go and when things get better by another one. It’s just a house and it can be replaced. That’s why the idea of using is a pretty powerful if used properly. The only exception is when a debtor is responsible for maintenance payments to an ex spouse, tax debts or student loans. In most of these situations, it is what it is and there’s no way to get away from paying these off. You will never know whether Chapter 7 bankruptcy could put you on the road to becoming debt-free until you discuss the matter with a bankruptcy attorney. They will be able to look at the overall picture of the debtor’s financial situation and have an idea of how the results will be.