Most people want to pay off unpaid bills because they feel it is the morally
correct and most responsible thing to do. Financial experts preach messages
about staying within one's means, building a safety fund and putting
remaining funds toward aggressive debt repayment. However, paying off
debts comes with high costs both to individual individuals and society.
Money that is paid toward debts is not put toward retirement savings or
reinvested into the economy as payment for goods and services.
Chapter 7 bankruptcy is a debtor's best option. Even though many people believe
struggling through years of debt repayment will make them feel better
about paying off their debts, it may not be the best solution long-term.
In the course of debt repayment, the debtor does not only lose the amount
paid toward paying off the debt. The debtor also loses savings in the
form of interest that could have accrued if the money paid toward debt
was instead put in a high-yield savings account.
When considering whether to try to
repay debts, negotiate a debt settlement or file for bankruptcy, it is wise for consumers
to consult experts who can explain the benefits of each option. It is
important to look at the bigger picture to discover what is truly the
best decision for the debtor and his or her family.
Chapter 7 bankruptcy is an excellent way for debtors to gain a financial
fresh start. The debtor is able to keep property that falls under state
or federal exceptions and can select which exemptions to apply to the
property in their estate. Filing for chapter 7 bankruptcy immediately
stops collection attempts. At the end of the bankruptcy process, all debts
that are dischargeable can be wiped out.