Filing Personal Bankruptcy
Filing personal 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. Bankruptcy doesn’t have the stigma it once did. However, it’s a very significant step with long-term ramifications. You should only consider bankruptcy as 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. If a chapter 7 discharge is granted, your creditors cannot collect payment from you. If so, you are given the opportunity to start over with a clean slate. Consulting a bankruptcy attorney is important as the bankruptcy trustee can sell your property that is not exempt in order to pay off your debts.
Filing a chapter 13 is more complicated. Chapter 13 is considered for those who want to keep their property, or have extra income to pay some or all of their debts. Stopping foreclosure is one of the advantages of filing a chapter 13 bankruptcy. This type of bankruptcy requires both a steady income and, more importantly, the discipline to adhere to the court-approved payment plan for several years. 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. There are a lot of resources online to learn more about bankruptcy including free bankruptcy forms and bankruptcy forums for advice.
