Why Chapter 7 bankruptcy may be a good idea

Many Minnesota residents struggle with high unsecured debt loads and may wonder the best way they can take care of the balances owed. While conventional wisdom indicates that people should do such things as consolidate or settle their debts, paying them off over a five-year period, doing that may not actually make the most financial sense.

Debt consolidation will involve getting a loan, using it to pay off all of the unsecured debts and then making regular monthly payments on the loan over time. Another alternative is for borrowers to enter into an arrangement to settle one or more individual debts for less than the amount owed.

If people who have high debt levels instead file for bankruptcy, they may have some of those obligations discharged in as little as 90 days. If they then commit to placing the amount they would have paid to settle or consolidate their debts into retirement accounts, they may be significantly better off than they would have been by paying the debts off, potentially ensuring they have hundreds of thousands of dollars in retirement funds they otherwise wouldn't have had.

Chapter 7 bankruptcy relief may ultimately be the best option for people who are struggling with unmanageable unsecured debt. People may thus want to consult with a bankruptcy attorney about whether they meet the eligibility requirements under that chapter. If they do file for bankruptcy, they may want to consider committing monthly funds to retirement accounts in order to help secure their financial futures. Bankruptcy may provide people with a fresh financial slate, allowing them to move forward free of their obligation to repay their old unsecured debts.

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