Bankruptcy is something that many people look at with disdain, but the reality is that it can be beneficial to those with no other options. Before you look into bankruptcy, though, you should consider other options. Consolidating your debts, negotiating with your creditors and even getting a second job could help you get back on track without having to go into bankruptcy.
When bankruptcy is your best or only option, don't feel like you've lost. It's there to help people in your situation successfully navigate their way out of debt and into a place of financial security. There are a few kinds of bankruptcy, but most consumers are looking at Chapter 7 or 13 bankruptcy to resolve their debts.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is also known as liquidation bankruptcy. With this form of bankruptcy, many assets are sold off to pay back debts. Then, any remaining unsecured debts are forgiven.
Chapter 13 bankruptcy
With Chapter 13 bankruptcy, you pay a monthly payment for your debts each month for between three and five years. Once you complete this period successfully, the remaining unsecured debts are eliminated.
Remember that bankruptcy is unlikely to eliminate student loan debt. It also generally can't be used to eliminate tax debts, child support or alimony debts. When you enter into bankruptcy, the debts you can discharge are typically unsecured, like credit card debts.
Either of these kinds of bankruptcy could help you get better control of your finances and give you a fresh start. Bankruptcy can help you resolve debts and get into a better position in your future.