Is Chapter 7 Bankruptcy Better Than Debt Settlement?

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While debt settlement companies stress avoiding bankruptcy, Chapter 7 bankruptcy law offers the best debt relief outcome by eliminating all unsecured debt and stopping creditor harrasment. Chapter 7 bankruptcy provides debt relief under Federal law and eliminates most forms of unsecured debt owed by the filer completely, also removing one's personal liability.

Filing Chapter 7

People can learn how to file for Chapter 7 bankruptcy on their own but most seek the help of a bankruptcy attorney to obtain the best outcome. The cost to file bankruptcy is negligible when considering the amount of debt that can be wiped out. The issue for many consumers who decide that the cost to file bankruptcy with a bankruptcy attorney is too high, is that that they don’t end up qualifying for Chapter 7 bankruptcy and miss the opportunity to have their debts wiped out and fully discharged.

Chapter 13 and Debt Settlement

Instead, they end up filing Chapter 13 bankruptcy where debt relief is available but not nearly to the degree offered by filing Chapter 7 bankruptcy. Under Chapter 13 bankruptcy law, the end result is similar to one provided by debt settlement services and you must repay a portion or 100% of your unsecured debt.

The difference with debt settlement programs and chapter 13 bankruptcy is significant when you consider the fact that debt settlement is not a federal law and creditors will continue collection efforts and harrasing phone calls. Either way, a payment plan is established with reduced balances of debt and payments made over a period ranging from 36 to 60 months.

The difference in results between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy can run into thousands of dollars simply due to the discharge of debt as opposed to the repayment of debts through a payment plan like those offered by debt settlement companies.

Get Qualified Legal Advice

In the end, simply knowing how to file Chapter 7 bankruptcy does not mean that you will be accepted under the "means test". A bankruptcy attorney is sort of like a good CPA being able to help qualify you for a chapter 7 bankruptcy when you're outside the box. The cost to file bankruptcy chapter 7 varies rom attorney to attorney depending what state and county you reside in and the complexity of your chapter 7 filing.

Filing chapter 7 bankruptcy with an experienced bankruptcy attorney is typically well worth it, especially if it means being accepted to file under the Chapter 7 bankruptcy laws and eliminate your debts completely. The bankruptcy attorneys at the Law Offices of Zhou & Chini offer a free consultation to see if you qualify for chapter 7 bankruptcy protection. Please contact us toll free at (800) 972-9600 or visit us online at the link below.