Over the last few years there has been a lot of interest in becoming debt-free. Many websites have been popping up from experts like Dave Ramsey, showing people how to get out of debt. The problem for many is when you’re on a limited budget, it is hard to set aside extra money to pay down those credit cards. That’s why one of the fastest ways to eliminate a large amount of unsecured debt is filing Chapter 7 bankruptcy. In fact, this is becoming one of the lesser-known . Although, there are no guarantees that filing bankruptcy will make you debt-free, if the stars are aligned there is a good chance one could be close to it.
First, one needs to evaluate what is the main source of their debt. At the end of 2011, it was reported that the average American had close to $16,000 in credit card debt. For someone that makes $25,000 a year, this amount of debt might as well be $1 million. The chances of ever paying this off are close to slim and none. For these folks, they will make minimum payments to continue kicking the can down the road while hoping for some sort of windfall. When the majority of one’s debt is unsecured, like credit cards, personal loans, medical bills and payday loans, it is much easier to become debt-free when filing Chapter 7 bankruptcy.
In today’s society, everyone will have some kind of debt. When you look at it, taxes in essence are a type of debt you can’t get away from. Even if you don’t have a mortgage payment, you have to pay your property taxes. So regardless of your lifestyle everyone is going to have bills. This is why many people don’t consider a mortgage payment a debt. If you don’t have a mortgage payment, because you don’t own a house, you will have to pay rent. The basic idea is there is a certain amount of money it is necessary to maintain your household and keep a roof over your head. Technically, most of this is debt that cannot be avoided. The debt they can be avoided is credit card debt and possibly an auto loan.
When you get down to it, many people use Chapter 7 bankruptcy as a way to become debt-free, except for the necessities like a mortgage and an auto payment. To me, someone could arguably eliminate the auto payment also because it’s not completely necessary to drive a brand-new car. The bottom line is, in America today, it’s next to impossible to become completely debt free, but filing Chapter 7 bankruptcy can get you just about as close as possible.