Filing Personal Bankruptcy
Filing bankruptcy offers forgiveness for many debts. Bankruptcy chapters are available to discharge debt completely or create a payment plan to pay off debt over several years. Choosing to file for bankruptcy is a very effective means of getting back on your financial feet. However, it’s a very significant step with long-term ramifications. All financial experts agree that bankruptcy should be a last resort.
There are two main bankruptcy options available to the consumer. Chapter 7 bankruptcy, also known as liquidation, and Chapter 13 bankruptcy which is a repayment plan.
Chapter 7 bankruptcy can be considered when you have no disposable income after paying living expenses. Given a successful conclusion, many of the most damaging debts, including those owed to credit card companies, may be discharged. After your debts are discharged, you can start over financially. While there is plenty that is protected in Chapter 7, your belongings can be liquidated by the court trustee who will then convert them into cash for the creditors.
The other option, a chapter 13 bankruptcy, can be more complex. It’s for people who can pay some or all of what is owed, but will need extra time to make good on their debts. One of the largest benefits to filing a chapter 13 is that foreclosure can be stopped on your home. You must have income and commit to making monthly payments to the bankruptcy court that are then paid to your creditors. Statistics show that only 30% of people who file ch 13 bankruptcy complete their payment plans.
Regardless of what type of bankruptcy you choose, the road to a successful outcome is paved with honesty. If you try to hide income or assets, your bankruptcy can be dismissed altogether. You could them be in worse shape than before financially. There are a lot of resources online to learn more about bankruptcy including free bankruptcy forms and bankruptcy forums for advice.
