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. Filing bankruptcy is a viable option for getting out of debt without the stigma of long ago. However, it’s a very significant step with long-term ramifications. All financial experts agree that bankruptcy should be a last resort.
Individual debtors have to chapters of bankruptcy to choose from. Chapter 7 bankruptcy, also known as liquidation, and Chapter 13 bankruptcy which is a repayment plan.
If you have no disposable income, then Chapter 7 bankruptcy can be considered. At the end of a chapter 7, your debts are discharged and credit companies cannot come after you for repayment. Chapter 7 gives you a clean slate once your debts are discharged. 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. Chapter 13 is considered for those who want to keep their property, or have extra income to pay some or all of 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. Only about 30% of ch 13 filers complete their payment plan.
Regardless of what type of bankruptcy you choose, the road to a successful outcome is paved with honesty. If you’re caught manipulating the numbers or trying to hide property, your bankruptcy has a strong chance of being canceled. Should that occur, you will be left in far worse financial shape than at the time of your filing. A free bankruptcy review from a bankruptcy attorney can help you make the right decision about filing bankruptcy, and you can find bankruptcy forms online for free.
