A lot of Americans are struggling with debt right now. So, if you’re in that position, know that you’re not alone. And also recognize that you don’t have to continue fighting to claw your way out of the debt spiral that continually tries to pull you under. There are very real debt relief options out there that can provide you with the fresh financial start that you need and deserve.
Depending on your circumstances, personal bankruptcy may be your best option. But there are a lot of misconceptions out there about the process and what it entails. Some people think that it will leave you penniless, while others think that a successful bankruptcy will leave you with a permanent mar on your financial record.
Neither of these are true. That’s why this week on the blog we want to briefly look at the basics of Chapter 7 and Chapter 13 bankruptcies so that you’ll hopefully have a better understanding of what they entail and how they can prove beneficial to you and your family.
The basics of Chapter 7 bankruptcy
A Chapter 7 bankruptcy is known as a liquidation bankruptcy. This is because your assets are sold and the proceeds are used to pay creditors. Most of the debt that remains after that process is finalized is then written off, thereby giving you significant debt relief.
Even though some of your assets have to be sold off to pay creditors, you still have the opportunity to utilize various bankruptcy exemptions. These exemptions leave you with some sort of financial stability post-bankruptcy.
A successful Chapter 7 bankruptcy will stay on your credit report for 10 years. Although that can seem daunting, there are steps that you can take to rebuild your credit, which should give you greater access to credit despite the bankruptcy being on your record.
The basics of Chapter 13 bankruptcy
A Chapter 13 bankruptcy does not liquidate your assets. Instead, you reorganize your debt and develop a repayment plan that is approved by creditors and the bankruptcy court. The plan lasts for several years, typically three or five years. If you can stick to that plan, many debts remaining at the end will be eliminated.
Many people choose Chapter 13 bankruptcy because it allows them to avoid foreclosure on their home and repossession of their vehicles. This is because the Chapter 13 process creates a stay on these proceedings, thereby giving you the time and opportunity to try to cure any outstanding debts.
Although the Chapter 13 bankruptcy process can take more time to resolve, it creates a lower monthly payment for your debt. Many people find this to be manageable.
Which option is right for you?
It really depends on your circumstances and what you hope to get out of the process. There are also eligibility requirements for each kind of bankruptcy that have to be met. Therefore, if you’re interested in learning more about the bankruptcy process, you might want to continue to research it.
Do you need legal guidance?
You can also learn more about the benefits of the bankruptcy process by speaking with a legal professional who is well versed in this area of the law. One of these advocates can provide you with guidance and advice, thereby ensuring that you’re able to make the fully informed decisions that are right for you and your family.
So, if you’re ready to reclaim your financial freedom, now may be the time for you to reach out for the help that you need.