Many people find themselves in a state of great financial difficulty. Despite the stigma surrounding this legal mechanism, bankruptcy is a viable solution to regain control of one’s personal financial future and start over.
Whether you find yourself in this situation because of a divorce, medical bills or credit card debt, we understand the emotional impact of this decision. However, it is crucial to understand your options and know that if you file for bankruptcy, the consequences do not last forever, and you can regain control of your life once and for all.
Chapter 7 and Chapter 13: the basics
The two types of bankruptcy available to you are Chapter 7 bankruptcy and Chapter 13. The latter, known as a “liquidation” type of bankruptcy, is designed for people looking for a fresh start. In Chapter 7, most of your unsecured debts will probably be discharged (i.e., forgiven) without any obligation to pay anything back.
In a Chapter 13 bankruptcy, known as the “reorganization” type, individuals with a regular income and the means to pay can keep their assets while repaying part of their debt over a certain time.
Which option is right for you?
Choosing between a Chapter 7 or Chapter 13 bankruptcy depends on your individual circumstances, which is why it is critically important to speak with a bankruptcy attorney who can guide you through the options and processes and how to begin and end the process should you choose to proceed.
In addition, each type of bankruptcy has specific legal requirements that may make you eligible or ineligible, so it is essential to understand how these legal mechanisms work and what your best option is based on your current situation.