In the United States, there are two types of bankruptcy provisions for individuals: Chapter 7 and Chapter 13. Both fall under federal jurisdiction, which means these cases are filed in United States Bankruptcy Court, even though they generally are governed by state law.

How Chapter 7 & 13 Bankruptcies Work

In Chapter 7 bankruptcy you are allowed to keep certain exempt property, however, some of your property will probably be sold / liquidated to pay down your debt. In Chapter 13 bankruptcy a debtor (you) proposes to pay creditors over a three- to five-year period. This written plan details all transactions that will occur. Repayment must begin within 30 to 45 days after the case has started. During this period, creditors cannot attempt to collect on debt except through bankruptcy court. In general, the individual keeps the property, and creditors end up with most of the money that is owed to them.

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The Truth about Chapter 7 & 13 Bankruptcies

Based on the new bankruptcy laws it's much tougher to qualify for Chapter 7. If you make too much money you will be forced to file for Chapter 13 bankruptcy. Depending on what chapter you qualify for you may wipe out all your unsecured debt, but only by selling property that you have in your possession. When filing Chapter 13 you will still pay back nearly 100% of your debt. The court assigns a trustee that will go through your finances with a fine tooth comb. Your trustee will negotiate with your creditors for lower interest rates.

With Debt Settlement, we also have to qualify you for debt settlement, however most everyone that applies for our program qualifies. To qualify you must have a certain amount of debt and have a hardship situation which everyone has, but may not know! We will then negotiate all your late fees, overdraft charges and other interest and penalties off of your total debt. We will then negotiate your original debt amount down by at least 50% - 60%. Lastly, we will negotiate that your creditors remove any derogatory marks from your credit history and mark your account as a non-derogatory account on your credit.

The cost of filing for bankruptcy can be anywhere from $1000-$5,000 depending on your state and attorney fees. This does not include the amount that still needs to be paid to your creditors. There will also be a 10 year negative impact on your credit report from filing for bankruptcy. Some other negative effects of filing for bankruptcy are: takes place in a public forum and may be listed in your local news paper, Could affect your future employment, could affect your insurance rates and you may end up paying higher interest rates on future credit lines, mortgages rates and loans.

With Debt Settlement, you will have one low monthly payment, usually less than you are currently paying your creditors and included in this low monthly payment is the money that you will use to pay off your debts. You credit will not suffer anymore than it already is if you're already overwhelmed with debt and making some late payments. Your credit score will immediately start to rise once you settle your first account. The above mentioned negative effects are not felt when you use debt settlement since your credit will show that you may have had some struggle keeping up with your debts, but will not show any third party assistance. Future creditors will never know that we were helping you become debt free.

Bankruptcy isn't always the best option to get out from under a massive debt load, so it's wise to carefully weigh the pros and cons of bankruptcy before rushing into it. Matrix Debt Relief is here to lend you a helping hand. Having the knowledge to ask the right questions and most of all, being correctly informed about your options is very powerful. Learning that debt settlement is the best way to go is your first step to being debt free. After you learn what you need to know, you can fill out our easy to use form and one of our Debt Consultants can personalize a debt settlement plan for you.