Bankruptcy isn’t something to be ashamed of. In the past, having to seek this protection was usually kept a secret. Now, we realize that filing bankruptcy is actually more responsible than just avoiding your creditors.
Once you make the decision to file, you need to decide what type you will file. For most people, the answer to this is one of the two common forms of consumer bankruptcy. These are Chapter 7 and Chapter 13. Both of these can relieve you of the financial pressures you feel now; however, they go about this in very different ways.
A Chapter 7 filing is one that requires you to liquidate your assets. Some assets are exempt from this process, so you might not have to get rid of everything. Once your assets are liquidated, the money from that is divided between your creditors. Any balances on the accounts after that are written off. There are specific means limits for this type of bankruptcy.
A Chapter 13 bankruptcy is often called a working man’s bankruptcy. In this form of bankruptcy, some of your assets are liquidated to help pay off creditors. You will also be put on a payment plan to repay some of the balances. The schedule is based on your income and your allowable living expenses. Once you have made all payments required of you, the bankruptcy is finalized and any balances are written off.
We realize that this is a lot of information for you to deal with, but we are here to help you learn about each form of bankruptcy. Once we know which one you will file, we can get the process moving forward.